LondonMetric Property sells four industrial estates to Hines for £40.5m

LondonMetric Property Plc has divested a portfolio consisting of four multi-let industrial estates to real estate investment firm Hines, at a price of £40.5 million. This sale reflects a Net Initial Yield (NIY) of 6.2%. Spanning 435,000 square feet across 47 units, the industrial estates generate an annual rental income of £2.7 million, with a Weighted Average Unexpired Lease Term (WAULT) to first break of 2.9 years. Three of these estates are situated in Birmingham—Kingshill, Redwood Park, and Shenstone—while the fourth is located in Rugby, specifically Triton Park.

“These assets have outperformed our initial expectations substantially, primarily due to rental growth and yield compression,” noted Andrew Jones, Chief Executive of LondonMetric. “The sale is expected to be EPS accretive and marks our departure from highly operational multi-let industrial estates.”

Initially acquired in June 2019 as part of the Mucklow acquisition for a designated price of £30.9 million, the sale of these estates aligns with the book value recorded in March 2023 and generates an ungeared Internal Rate of Return (IRR) of 13%. This transaction raises the total disposed assets from the former Mucklow acquisition to £194 million, constituting 35% of the original portfolio and achieving a 26% uplift against the allocated cost.

LondonMetric will shift its focus towards Triple Net Lease (NNN) assets going forward, aiming for secure income and growth without the burden of operational costs, according to Andrew Jones.