Strettons Advises Reynolds in £44 Million LondonMetric Deal
Agreement sees LondonMetric purchase Waltham Cross logistics warehouse from Reynolds through a sale and leaseback transaction.
We are pleased to announce that our Industrial Agency Department has advised longstanding client Reynolds, a national food service business, on a landmark transaction £44 million transaction.
The deal sees Reynolds sell its urban logistics warehouse in Waltham Cross to LondonMetric for £43.8 million through a sale and leaseback transaction and demonstrates the strength of investor demand for London industrial assets.
Reynolds will now leaseback the 115,000 sq ft warehouse on a new 23 year lease with CPI +1 linked rent reviews of between 2-4%. The building is located in a highly established logistics area of Enfield adjacent to the M25.
The property generates a rent of £1.6 million per annum which is just under 10% below market rent. There are no lease incentives as part of the sale and leaseback and the contractual rent reviews will increase the purchase net initial yield from 3.5% to an expected 4.0% after five years. The purchase price is nearly 100% underwritten by the residual value of the land which reflects the very strong geography of the asset.
Commenting on the transaction, Neal Matthews, Strettons Industrial Agency Director said: “Our client has taken the opportunity to capitalise on the strong London industrial property market and we are delighted to have completed on this transaction with them. We have worked with Reynolds for many years and are pleased that they have trusted our advice on how to capitalise on their property assets and the strong market to secure funding for the future prosperity of the company.
"The deal has enabled Reynolds to secure funds that will repay Covid business loans and finance exciting growth plans as well as other new opportunities available to the company as it progressively exits lockdown.
“This is the latest deal that Strettons has worked on with LondonMetric which demonstrates the strong demand from investors for opportunities in the London Industrial market, particularly in east and north east London.”
The deal comes as Strettons launches its own Investment Advisory Service which will be led by Investment Director Jonny Doulton. This signals Strettons’ longer term ambitions for more targeted investment activity on behalf of investors, funds and institutional contacts with a particular focus on Strettons core geographic area of east and north London and the various sectors in which it operates.
Jonny Doulton comments: “The continued razor sharp focus from investors on London industrial assets is reflected in the strong pricing achieved by Strettons on behalf of Reynolds, and we look forward to delivering more industrial deals at these levels. 3.5% NIY / £43.8m for 23 year CPI linked income is positively readjusting the tone of the London’s urban logistics market.”