Stenprop, the UK multi-let industrial property company, has acquired Gainsborough Trading Estate, an industrial estate in Stourbridge, near Birmingham, in an off-market transaction from a private investor for £6.2 million, which reflects a net initial yield of 9.1%.
Gainsborough Trading Estate in Rufford Road has 37 units, totalling 162,142 sq ft, of which just one is vacant. The total annual passing rent of £604,000, which includes income from solar panels installed on some of the units, equates to a low average rent of £3.17/sq ft.
Julian Carey, Stenprop’s Executive Property Director, said: “This acquisition increases our multi-let industrial portfolio to more than £250 million and around 4 million sq ft. This estate provides a mix of small industrial units of different ages and specifications in a strong location. We have long been fans of investing in and around Birmingham, and the excellent demand-supply dynamics in the area are clear to see from the excellent letting history at Gainsborough Trading Estate. We are excited about rolling our Industrials operating platform out in Stourbridge and hope to acquire more estates in the area on the back of it”.
Stenprop’s strategic objective is to deliver sustainable, growing income to shareholders which is best achieved by becoming a specialised UK multi-let industrial (MLI) property company. This strategic repositioning means that Stenprop intends, over the next few years, to sell all of its non-MLI assets and utilise the sale proceeds to build a focused UK MLI business.
Following the acquisition of Gainsborough Trading Estate, MLI assets account for 41% of Stenprop’s portfolio. MLI assets are expected to comprise approximately 60% of Stenprop’s total portfolio of properties by 31 March 2020.
Harvey Pearson, Director at Hexagon Commercial Property, commented that “Demand for the estate was very strong due to the low rental tone across the estate coupled with well maintained units. This transaction provides further evidence of the strength of the Industrial Investment sector”.
The vendor was represented by Hexagon Commercial Property and the purchasers by Wood Advisory.