AEW UK Core Property Fund asset management transactions deliver strong returns

AEW UK Core Property Fund (AEW) has sold two industrial properties for a total of GBP9.4 milllion in Batley, West Yorkshire, and Newbridge, Edinburgh. The sales are the culmination of the long-term business plans for each site. 

AEW Core has also made an acquisition of a prime retail location in Bristol city centre for GBP2.32m and has secured planning permission to develop industrial units in Grazebrook, Dudley, West Midlands.
 
AEW has sold Batley 111, a single-let industrial unit located nearby in Batley, West Yorkshire, which AEW acquired in May 2017 and has sold to a local investor for GBP5m, at a significant premium to both recent valuations and its purchase price, returning a 21 per cent IRR for the fund. The 111,965 sq ft site had been let fully to Puma, the long-term tenant. Puma will shortly vacate the site with the new owner becoming the sole occupier of the building.
 
AEW has also sold a small industrial unit at Lochend Industrial Estate in Newbridge, Edinburgh for GBP4.4 million, equating to GBP85 per sq ft for the 51,671 sq ft site. Purchased in April 2013 for GBP1.5 million, the single let industrial unit is let to a strong covenant, with a recently regeared lease providing an attractive income profile for the purchaser. The disposal follows the completion of a long-term business plan.
 
In addition to these property disposals, AEW has acquired 29-31 The Horsefair and 6-10 St James Barton, two retail sites in the heart of Bristol city centre, for GBP2.32 million. The assets, which total 16,299 sq ft in size, neighbour additional retail sites currently owned by the fund and are fully let to five occupiers, all consumer-facing retail and leisure businesses.
 
AEW has also recently secured planning permission to develop 107,700 sq ft of new industrial units at its site in Grazebrook, Dudley, West Midlands. The multi-let industrial site will see up to 8 new units varying in size from 3,600 sq ft up to 43,100 sq ft across four buildings developed alongside existing ones, which are income producing. Construction is expected to begin mid-2021 with a build period of nine to twelve months. The wider Grazebrook Industrial Estate was purchased by AEW in 2018 and is well placed to take advantage of occupier demand in a traditional centre for heavy industrial manufacturing in the West Midlands.
 
Michael Shears, Executive Director at AEW, says: “We are pleased to have sold two of AEW Core’s properties in line with our target returns. The disposals are the culmination of our diligent asset management strategy that has been successfully executed for each asset.
 
We are also pleased to have purchased two assets in Bristol city centre. These retail locations are ideally situated in the heart of Bristol, offering excellent potential for value accretion. An example of our active asset management strategy is the planning permission we have now secured for our asset at Grazebrook Industrial Estate to develop new units. Once completed, this will in turn increase the available sites for letting, the potential rental income produced by the site and its overall value.”