Record deal as Mountpark sells £126m shed to Korean investor

John Cutts’ Mountpark Logistics has pulled off a £126m shed sale – the biggest-ever deal for an industrial unit in the UK.

A private Korean investor, fronted by BNP Paribas REIM, has agreed terms to buy the Amazon-let fulfilment centre in the Midlands for the record-breaking amount.

The deal eclipses the £114m set in 2014 when Legal & General sold a Waitrose-occupied facility at Magna Park, Milton Keynes, to IDI Gazeley.

Contracts have been signed on the forward sale of the 1m sq ft unit in Bardon, Leicestershire, at a yield of 4.5%.

For Cutts – known as the ‘godfather of sheds’ after leading the distribution centre revolution in the 1990s – it is the most substantial deal since his return to the industrial and logistics market with Mountpark in 2013.

“This is a huge deal for the market, not only because it is the biggest lot size ever for a single-let shed, but because it demonstrates that the UK distribution market is an increasingly attractive proposition for overseas money,” a source close to the transaction told Property Week.

Earlier this year, Mountpark signed up online retail giant Amazon on a 15-year lease and an annual rent of just over £6m, equating to £5.75/sq ft, with RPI-linked kickers.

The 1.053m sq ft building is currently under construction and is due to complete in early October.

“Significant interest” from abroad

“As the UK investment market continues to evolve we are witnessing significant interest from international investors in logistics assets,” Hugh White, head of national investment at BNP Paribas Real Estate, which is acting for the buyer, said.

“These investors are attracted by the covenant strength, lease length and ever increasing growth in distribution driven, in part, by e-commerce. 

“Effective logistics networks are now essential to meeting consumers’ need for ‘convenience’ when shopping online which directly corresponds to success for retailers.”

Mountpark is also pressing ahead with plans to build two speculative units of 314,500 sq ft and 64,500 sq ft on plots adjoining the Amazon fulfilment centre.

Cutts’ fortune

Cutts made a fortune developing big sheds and twice within a decade sold his companies to US distribution colossus Prologis, selling Kingspark in 1998 and Parkridge in 2007.

He secured the backing of one of the US’s largest institutional investors, USAA Realco, for Mountpark in 2014, and has since been actively building a Europe-wide portfolio.

Mountpark recently let a 277,000 sq ft spec unit to Amazon at Airport City, Manchester.

It also bought a former Ford Transit plant in Southampton, where it plans to build a 450,000 sq ft scheme.

Additionally, it is under offer to buy a 20-acre site in Bristol that could accommodate a 400,000 sq ft unit.

DTRE and CBRE advised Mountpark. BNP Paribas Real Estate advised the buyer.

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