Warehouse REIT completes £57.5m sale of single-let assets to strengthen multi-let focus

Warehouse REIT, a prominent UK Real Estate Investment Trust specializing in multi-let warehouse investments, has successfully completed the sale of three single-let assets for a combined total of £57.5 million. These transactions align with the company’s strategic pivot towards enhancing its multi-let warehouse portfolio, with the sales proceeds contributing to its deleveraging plan initiated in November 2022.

The assets sold include Barlborough Links in Chesterfield for £46.0 million, Parkway Industrial Estate in Plymouth for £6.3 million, and Celtic Business Park in Newport for £5.2 million. The combined sales price matches the valuation as of March 31, 2024, and represents a net yield on passing rent of 5.8%. This strategic divestiture has brought Warehouse REIT’s total sales to £165.2 million since announcing its deleveraging strategy.

Following these sales, the proportion of multi-let assets in Warehouse REIT’s portfolio has increased from approximately 70% as of September 30, 2023, to about 77% on a pro forma basis. This shift underscores the trust’s commitment to the multi-let sector, known for its ability to accommodate a diverse range of occupants throughout various stages of their lifecycle and offer quicker access to rental revisions due to the frequent lease events.

Simon Hope of Warehouse REIT articulated the dual benefit of these disposals: “Rebuilding dividend coverage is our key priority, and by reducing our debt and our finance costs, the sale of these single-let assets is an important milestone in that respect. At the same time, we continue to reshape our portfolio to focus on the highly attractive multi-let subsector of UK real estate, which plays to our strengths and is where we can drive income and capital growth over the long term.”

Warehouse REIT continues to invest in its growth strategy by selectively acquiring assets with potential and delivering on opportunities it has created through proactive asset management. This approach not only unlocks the value inherent in their portfolio but also captures rising rents and drives an increase in capital values, ensuring robust returns for its investors. Sustainability remains a core component of Warehouse REIT’s strategy, helping to meet the expectations of stakeholders today and future-proofing the business for tomorrow.

The strategic sale of single-let assets by Warehouse REIT demonstrates a savvy realignment of their investment focus towards multi-let properties. This move not only enhances their portfolio’s flexibility and attractiveness to a broader range of tenants but also solidifies their financial footing through significant debt reduction. The focus on multi-let properties, coupled with an ongoing commitment to sustainable practices, positions Warehouse REIT to capitalize on the growing demand for versatile warehouse spaces in the UK.

With the successful divestment of its single-let assets and a renewed focus on multi-let properties, Warehouse REIT is strategically positioned to leverage the dynamic UK warehouse market, driving both income and capital growth. The company’s forward-looking approach ensures it remains a compelling choice for investors seeking exposure to the lucrative warehouse and industrial sectors.