Investment trust Tritax Big Box has purchased a £77.3m distribution centre as it looks to add income to its portfolio.
The real estate investment trust, which is currently valued at £1.3bn, bought electrical retailer Dixons Carphone’s national distribution centre.
The trust invests in distribution space, including buildings occupied by brands like Morrison, Rolls Royce and Tesco.
Colin Godfrey, partner of Tritax, said the move diversifies the portfolio’s tenant and geographic mix.
The deal will be funded from equity proceeds and Tritax expects to introduce senior debt later on.
With an unexpired lease term of 20 years, the property benefits from a 3 per cent yearly increase in fixed rental prices.
Mr Godfrey said the acquisition is a “strong addition” to the income within the portfolio, which consists of 28 Big Box logistics assets that together have an average unexpired lease term of nearly 17 years.
Scott Gallacher, director of Leicester-based Rowley Turton, said the trust makes sense as a small part of a portfolio, although he added a general scepticism about property.
“I think people get seduced by bricks and mortar because it always gives the illusion of being incredibly low risk,” he said, pointing to the banking crash where property lost about 40 per cent overnight.
“I think the trust’s investment approach seems logical, with decent leases and reasonable increases in fixed rental prices.
“At the moment, in a low-inflation world the 3 per cent increase looks good, but equally if inflation was higher it might not look so good.”
katherine.denham@ft.com
