BMO Real Estate Partners completes forward purchase and double pre-let of Milton Keynes industrial asset from developer Hampton Brook
BMO Real Estate Partners (BMO REP), part of BMO Financial Group’s GBP206 billion Global Asset Management business, has completed the forward-purchase of an industrial asset in Milton Keynes on behalf of a segregated mandate client for GBP7.05 million, representing a net initial yield of 5.35 per cent.
The developer and vendor was Hampton Brook, a private developer specialising in the midlands and south-east. BMO REP committed to acquiring the asset in November 2018, from developer and vendor, Hampton Brook, at which point it was 50% pre-let, and recently completed the transaction having secured a new tenant, Arnold Laver & Company, for the remainder of the scheme, enabling it to commence operations at full occupancy.
The industrial asset, known as ‘Velocity’, comprises two newly built warehouse units totalling 48,000 sq ft. The two self-contained units provide high specification and energy efficient industrial accommodation, and each contain office space, kitchen and showering facilities, double-height access doors and generous parking provisions.
Unit One, comprising 24,885 sq ft, has been let to Essanet Limited, an IT consultancy company on a 16-year lease with no breaks. The 22,710 sq ft Unit Two has been taken by Arnold Laver & Company, the British timber merchant, on a ten-year term. Rents averaging GBP8.50 psf have been achieved at the scheme.
Velocity benefits from a strategic South East industrial location in the Knowhill business district just 1.5 miles south of Central Milton Keynes and its national railway station, which has a direct service to London Euston in just 35 minutes. The property has excellent access to the A5, M1 and M40 motorways, which has supported the area’s popularity among leading operators, with local Knowhill occupiers including DHL, Mitsubishi NHBC.
Matthew Howard, Director, Property Funds at BMO Real Estate Partners says: “This investment increases our client’s exposure to the strongly performing South East industrial market and is part of our strategy to reinvest capital from sales into income and growth assets. By having the conviction to commit to a forward purchase of this asset we benefited from accessing an undersupplied market at an attractive entry point. Our ability to pre-let the scheme ahead of completion to two high-quality tenants at attractive terms is testament to the quality of this asset developed by Hampton Brook.”
Ian Jackson, Director of Hampton Brook, adds: “We are delighted both of these units have been let in such a short timescale. Velocity is the only new build scheme of this size in Milton Keynes and our decision to speculatively develop reflects our local knowledge and confidence in the market.”