13th May 2015 07:32
LONDON (Alliance News) - Tritax Big Box REIT PLC Wednesday said it has exchanged contracts to provide forward funding for the development of a new distribution and production facility in Wigan, near Manchester, which will be pre-let to Nice-Pak International Ltd.
The site, located in Westwood Park, just south of Wigan town centre, will be let out to Nice-Pak, which manufactures and supplies wet wipes, to serve as its primary headquarters.
Tritax said the site will be leased for 25 years, without break, subject to five yearly upward-only rent reviews indexed to the UK retail price index, providing a minimum of 2%, maximum of 4% per year rental growth. During the construction phase, Tritax will receive an income return equivalent to the rent from the developer.
"Nice-Pak intends to commit significant capital into the property through machinery and automation in order to enhance production and distribution efficiency," Tritax noted in a statement.
Tritax said the investment cost is GBP28.7 million, reflecting a yield of 6.4%.
Construction of the main works is expected to commence in May, with practical completion of the construction targeted for the spring of 2016. The land purchase will be funded from equity proceeds, with senior debt finance expected to be introduced in the near term, Tritax added.
"This investment in Nice-Pak's new HQ and distribution and production facility in Wigan adds further diversification to our portfolio tenant mix. The investment also increases the weighted average unexpired lease term and is accretive to our running yield," Tritax Partner Colin Godfrey said.
Separately, Tritax said it has drawn on senior debt financing secured on the B&Q Regional Distribution Centre at Worksop, Nottinghamshire, which it purchased on April 29. The facility has been agreed with Barclays Bank PLC to the value of GBP40.4 million, reflecting a loan to value ratio of 45% at the asset level, it said.
The debt financing for the distribution centre is for a term of five years, with an option to extend the term of the loan by up to one further year, Tritax said.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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