Warehouse REIT divests industrial properties for £13.4m

Warehouse REIT, a prominent UK Real Estate Investment Trust specializing in multi-let industrial warehouse investments, recently disclosed the sale of two significant assets in separate transactions, totaling £13.4 million. This strategic move not only underscores the company’s adeptness in capitalizing on market opportunities but also highlights its commitment to optimizing its portfolio for enhanced shareholder value.

The transactions include the disposal of Warrington South Industrial Estate, a 106,000 square foot single-let property acquired in 2019 and sold for £11.6 million, and Pellon Lane, a 20,000 square foot multi-let property in Halifax acquired in 2017, which fetched £1.8 million. Remarkably, the combined sale price was 3.7% above the assets’ book value as of September 2023, reflecting an average net initial yield of 5.3%. These sales are part of Warehouse REIT’s broader strategy of capital recycling, with total disposals since April 1, 2023, amounting to £53 million.

Simon Hope of Warehouse REIT articulated the rationale behind these disposals, stating, “Strengthening our balance sheet and earnings position by releasing capital from assets which are low yielding or where we have successfully executed our business plan is a key priority for us. As these disposals show, we continue to evaluate all opportunities to do that.” His commentary underscores the company’s proactive approach to asset management and its focus on realizing value from its investments in a challenging market.

Despite a subdued investment market, Warehouse REIT’s ability to sell assets above book value demonstrates its strategic acumen in identifying and exploiting demand pockets. This not only benefits shareholders through value crystallization but also aligns the company’s portfolio towards multi-let assets, which represent the most attractive opportunities according to Warehouse REIT’s assessment.

Warehouse REIT’s investment philosophy emphasizes flexibility, sustainability, and proactive asset management to meet the evolving needs of its occupiers and deliver long-term returns to its investors. By focusing on multi-let assets situated in key industrial hubs across the UK, the company aims to offer accommodation that supports the growth and adaptability of its tenants’ businesses. This strategic focus is designed to foster tenant retention and drive both rental income and capital value appreciation, reinforcing Warehouse REIT’s position as a forward-thinking player in the UK’s industrial real estate market.

The recent asset disposals by Warehouse REIT are indicative of a broader trend in the real estate investment trust (REIT) sector, where strategic asset management and capital recycling are critical to navigating market dynamics. By focusing on high-potential multi-let assets and maintaining a strong balance sheet, Warehouse REIT is well-positioned to capitalize on the evolving demands of the industrial real estate market, ensuring sustainable growth and returns for its stakeholders.