Frasers Logistics & Commercial Trust buys freehold logistics development in UK for £101m

THE manager of Frasers Logistics & Commercial Trust (FLCT) announced on Saturday (Jun 25) that it has acquired a freehold logistics development in the UK for a total consideration on a completed basis of £101 million (S$171.7 million).

The forward funding investment will see FLCT fund the development of the new facility by seller Stoford Properties, a UK developer specialising in industrial, production and logistics facilities.

The maximum consideration, which is in line with an independent valuation conducted by CBRE as at Jun 1, includes the cost of development.

Located within the Hooton Business Park in Cheshire in north-west England, the property will sit on a 14.4 ha site and will have a total lettable area of 667,185 sq ft.

Development of the property is expected to be completed in the second half of 2023.

It will then be leased to Peugeot Motor Company for a lease term of 15 years with 5-yearly, upward-only rent reviews. The property will serve as Peugeot’s national distribution centre in the UK.

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“The forward funding acquisition presents an excellent opportunity to add a state-of-the-art logistics facility to FLCT’s growing UK logistics and industrial portfolio,” said Robert Wallace, chief executive officer of the Reit manager.

“The property will mark FLCT’s fourth logistics and industrial investment in the UK and is strategically sited in a well-established logistics and industrial precinct in UK’s North West, which will enable us to deepen FLCT’s presence in the attractive UK logistics real estate space, while supporting our objectives of delivering sustainable long-term value to our unitholders,” he added.

The acquisition will be FLCT’s sixth property in the UK and will increase the real estate investment trust’s (Reit) exposure in the UK market to 13 per cent of its total portfolio value, up from 10.7 per cent previously.

The weighting of FLCT’s portfolio by value towards logistics and industrial assets will grow to 67.1 per cent, from 66.3 per cent.

Weighted average lease expiry will increase to 4.8 years from 4.6 years, with a portfolio occupancy rate of 96.2 per cent.

Including the acquisition fee payable to the Reit manager as well as professional and other fees and expenses, the total cost of the proposed acquisition is estimated to be £103.5 million.

The Reit manager said the acquisition will be funded through the proceeds of its divestment of Cross Street Exchange in Singapore and existing debt facilities.

It added that the acquisition is not expected to have any material effect on FLCT’s net tangible assets.

Units of FLCT last closed flat at S$1.35 on Jun 24.