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FLCT invests in prime freehold warehouse development in UK's West Midlands for $51.5 mil

Felicia Tan
Felicia Tan12/1/2021 08:53 AM GMT+08  • 3 min read
FLCT invests in prime freehold warehouse development in UK's West Midlands for $51.5 mil
The property is expected to be completed in the first quarter of 2023.
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The manager of Frasers Logistics and Commercial Trust (FLCT) has invested in a forward funding acquisition of a prime freehold warehouse development in Worcester, West Midlands, in the UK on Nov 30.

The agreement was signed by FLCT’s wholly-owned subsidiary, Worcester Property Co Limited with Stoford (Worcester) to fund the development of the new facility.

The all-in maximum consideration for the proposed acquisition on a completed basis is £28.3 million ($51.5 million).

The amount takes into consideration the valuation conducted by CBRE Limited at £28.3 million as at Nov 15.

The property is expected to be completed in the first quarter of 2023.

The proposed acquisition will be FLCT’s second warehouse property in the UK. Following the acquisition, FLCT’s exposure to the UK market will be 10.9% of its total portfolio value from 10.2% previously.

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The total cost of the acquisition is estimated to be approximately £29.1 million. The amount comprises the maximum consideration, the acquisition fee payable to the REIT Manager in units in FLCT, as well as professional and other fees and expenses.

The property is located within the Worcester Six business park, which is adjacent to junction 6 of the M5 Motorway in the county of Worcestershire.

The park is a new one with development planning consent for up to 1.5 million sq ft to serve warehousing, industrial, technology, manufacturing and office users.

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The centralised position of the site strategically serves the West Midlands, North West, South West and Welsh regions of the UK.

To-date, over 700,000 sq ft of employment space at Worcester Six has been delivered or committed by the developer, Stoford Properties Ltd, with other notable occupiers including Kohler Mira Limited, Kimal PLC, Zwick Roell Group, Super Smart Service Ltd and Spire Healthcare Group.

The Worcester Six estate has also met the requirements to achieve a Building Research Establishment Environmental Assessment Method (BREEAM) Communities “Very Good” certificate.

When developed, the property will have a total lettable area of 180,121 sq ft on a 3.48-hectare site.

The building will be constructed to high specifications with an eaves height of 12.5 meters, 27 loading doors, extensive car parking spaces and a target Energy Performance Certificate rating of “A”.

Upon completion of the development, the property will be leased to Alliance Flooring Distribution Limited on a new 15-year lease. It will also be its headquarter flagship warehouse in the UK.

“The acquisition through a forward funding agreement for a prime, freehold high-specification facility in the UK is the continuation of our strategy to grow FLCT’s core logistics and industrial portfolio in existing markets. With a committed lease term of 15 years to an international distributor of flooring products, the proposed acquisition is expected to further enhance FLCT’s portfolio metrics while providing unitholders with a stable and long-term income stream,” says Robert Wallace, CEO of the manager.

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“The acquisition is our second third-party acquisition, reaffirming FLCT’s deal-sourcing capabilities whilst scaling up our footprint in the attractive UK logistics real estate space, where demand and take-up levels are expected to remain strong,” he adds.

Units in FLCT closed at $1.47 on Nov 30.

Photo: FLCT

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