Frasers Logistics & Commercial Trust invests in UK warehouse development

An artist's impression of the property under development at Worcester Six, a new business park in West Midlands, U.K. Frasers Logistics & Commercial Trust entered a deal to acquire the development property in late November 2021. Credit: FLCTAn artist's impression of the property under development at Worcester Six, a new business park in West Midlands, U.K. Frasers Logistics & Commercial Trust entered a deal to acquire the development property in late November 2021. Credit: FLCT

Frasers Logistics & Commercial Trust said late Tuesday it would acquire a property to be developed at Worcester Six, a new business park in the West Midlands, U.K. for a maximum of 28.3 million British pounds, or around S$51.5 million.

Under the deal, FLCT’s wholly owned subsidiary Worcester Property will buy the property from unrelated third party Stoford (Worcester), with FLCT to fund the development of the new facility, the trust said in a filing to SGX.

“The acquisition through a forward funding agreement for a prime, freehold high-specification facility in the U.K. is the continuation of our strategy to grow FLCT’s core logistics and industrial portfolio in existing markets,” Robert Wallace, CEO of FLCT’s manager, said in the filing.

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

The deal will be funded with internal resources and/or existing debt facilities, the filing said.

Flooring-products tenant

“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,” he added.

The property, which is expected to be completed in the first quarter of 2023, will be leased to Alliance Flooring Distribution, a subsidiary of Victoria PLC, a London-listed flooring manufacturer, on a new 15-year lese, subject to five yearly upward-only rent reviews, the filing said.

The site is positioned near the business park’s entrance, with frontage to the access road, the filing said.

The maximum consideration took into consideration an independent valuation from CBRE of 28.3 million pounds as of 15 November, the filing said.

The property’s location at the Worcester Six business park, in the county of Worcestershire, strategically services the West Midlands, North West, South West and Welsh regions of the U.K., FLCT said, adding around 80 percent of the U.K.’s population can be reached within four hours’ drive of the location.

The development would be FLCT’s second warehouse property in the U.K., increasing FLCT’s exposure to the U.K.’s market to 10.9 percent of portfolio value, up from 10.2 percent before the acquisition, the filing said.