UK Commercial Property Trust (UKCPT) is to invest a total of GBP48m in three properties at the Aberdeen Gateway Business Park, on the south side of Aberdeen.
The properties are currently being developed by Muir Group and on completion will generate a net initial yield of 6.0 per cent with the benefit of guaranteed rental uplifts, providing a level of inflation-proof income. The average lease length will be 19 years.
The investment includes:
▪ The forward funding of a 181,050 sq ft warehouse development with an expected completion date of December 2014, which has been pre-let to Total E&P. Work is now underway following the acquisition of the site in mid-January.
▪ The forward purchase of a 60,000 sq ft mixed warehouse and office property, due to be completed in August 2014 and let to Tetra Technologies.
▪ The forward purchase of a 25,000 sq ft office building, due to be completed in July 2014 and let to Ensco Services.
The tenants operate in the energy sector.
The acquisition of these properties will, on completion of the properties, increase UKCPT’s weighting to the industrial sector to 24 per cent of the portfolio, increasing exposure to a sector that the management team has identified as offering attractive income and value growth prospects. The Aberdeen economy, benefiting from the global outreach of the energy and oil and gas industries, is also one of the most robust in the UK, and provides further geographic diversification for the portfolio.
Robert Boag, senior investment director at Ignis Asset Management, says: “We believe that Aberdeen industrial property, which has shown robust performance underpinned by long term demand particularly from the energy sector, is one of the most attractive sub-markets in UK commercial property and this is a unique opportunity to acquire three very high quality industrial and office developments within an attractive business park environment. The acquisitions will provide long term, secure income, in line with our strategy of generating income and valuation growth on behalf of our shareholders.”
Ewan Black, development director at Muir Group, says: “The investment transactions agreed with UKCPT, further highlights the attractiveness of Aberdeen Gateway as the primary business park on the south side of Aberdeen for both occupiers and institutional investors. We are also in the process of negotiating further pre-let opportunities and recently obtained planning consent for two speculative developments, an industrial unit of 15,000 sq ft and an office pavilion of 20,000 sq ft. Occupational demand from the energy sector in Aberdeen remains strong as occupiers consolidate multiple and dated facilities into modern efficient accommodation. The money released from these transactions will enable Muir Group to further invest into the market and our project at Aberdeen Gateway.”
Ignis and UKCPT were represented by The Edinburgh office of BNP Paribas Real Estate and Shepherd and Wedderburn. Muir Group was represented by Ryden and Knight Frank in Aberdeen and Davidson Chalmers.