Welcome To The Midlands, The Place To Find Real Estate Income
A chunk of the Walkers crisp factory and a Coventry car storage lot may not look like assets worth chasing.
But as investors intensify the hunt for income, and pair that with an eye for long-term angles, a new constellation of Midlands locations is coming into focus.
Oxenwood Real Estate, the investment management business co-founded by Jeremy Bishop and Stewart Little in 2014, has shown how the region is at the front of investors' minds, buying into two sites that tick both the income and potential boxes.
A third Midlands deal, valued at around £9M will be agreed in Kettering later this month.
Competition from other investors diverting into logistics property is forcing the pace.
Oxenwood acquired the 10-acre Pendragon car store site at Foleshill Road, Coventry, for £17.9M, a net initial yield of 5.15%.
It has been acquired from clients of LaSalle Investment Management by Oxenwood for Oxenwood Catalina, its joint venture with Apollo-owned Catalina Holdings (Bermuda) Ltd.
The site delivers what would today count as long-dated income, thanks to a 13-year lease to Lex Autolease, part of the Lloyds Banking Group. There are index-linked rent reviews.
But the longer-term play is the site’s potential for urban logistics.
"We’re buying for Catalina, and it is an insurance company and so it needs the income. But we’re trying to align that with the logistics sector, trying to match long-term potential in that sector with the need for income,” Little, Oxenwood's chief executive, told Bisnow.
“The purchase of the facility in Coventry represents a rare opportunity to acquire a large central site with very strong underlying fundamentals … with the potential for logistics use in the longer term."
In the second off-market deal Oxenwood acquired a 122K SF distribution warehouse that supports the Walkers crisp manufacturing complex in Leicester. It paid £12.1M, a net initial yield of 5%.
Longish-dated income is assured by 10 years remaining on a lease to Walkers, the PepsiCo subsidiary. The nearby Walkers complex on Bursom Industrial Estate is the largest crisp production plant in the world, producing more than 11 million bags of crisps per day.
“The building is integral to the wider Walkers’ operation, which may give rise to further asset management initiatives in the future,” Little said, referring to the long-term play.
At Leicester Oxenwood was advised by Lambert Smith Hampton and the vendor was advised by TT&G Partners.
On the Coventry deal, Oxenwood was advised by Hoddell Stotesbury Morgan and the vendor was advised by Knight Frank.
