LondonMetric Property has revealed plans to raise £97m via a share placing and secured major new lettings to Eddie Stobart and Michelin.
The placing, which represents just under 10% of the company’s issued share capital, will be used to fund about £100m of last mile distribution investments and developments and the company expects 75% of the proceeds to be deployed within six months.
“Our increased commitment to last mile acquisitions and short cycle distribution developments, together with a healthy pipeline of further opportunities, will support our plans to grow our distribution exposure to at least 70% within a year,” said LondonMetric chief executive Andrew Jones.
The company said £42m would be used to fund developments in Dagenham, Stoke and Crawley with an anticipated yield on cost of 6.2%, £28m would be used to fund recently completed distribution investments acquired at a blended net initial yield of 5.9% and £30m would fund a pipeline of last mile and regional distribution investments.
The placing was announced at the same time as LondonMetric revealed it had exchanged contracts with Eddie Stobart to build a single new 180,000 sq ft distribution unit at its logistics centre in Dagenham.
Under the terms of the transaction, Eddie Stobart has signed a new 26-year lease across the enlarged 436,000 sq ft logistics centre at an increased rent, subject to five yearly RPI rent reviews.
Total development costs are anticipated to be £16m, delivering a marginal yield on cost of about 5.75%.
LondonMetric has also exchanged contracts with Michelin to build a new 137,000 sq ft distribution centre at its site in Stoke. Michelin has signed a new 15 year lease at a rent of £5.35 psf, subject to five yearly reviews, at the higher end of open market and guaranteed fixed uplifts. The anticipated yield on cost is 6.3%.
Finally, at Omega South in Warrington, all conditions relating to the new letting of 357,000 sq ft to Amazon have been also satisfied and they have taken occupation. Amazon signed a new 15 year lease with rent reviews linked to CPI.