LondonMetric Property PLC (LON:LMP) has agreed to purchase and fund a new distribution warehouse for £24mln.
The FTSE 250 firm said the 232,000 square foot development had a yield on cost of 5.2% and had already been pre-let to chemicals firm Croda International PLC (LON:CRDA) on a 20-year lease with a rent of £1.3mln per year subject to RPI linked rental increases of 1-3% annually.
READ: A & J Mucklow succumbs to £415mln offer from LondonMetric
Construction of the warehouse would begin “imminently” and was expected to complete by mid-2020, the company said, adding that there was planning consent for another 140,000 sq ft of additional development at the site.
Andrew Jones, LondonMetric’s chief executive, said the development benefitted from a “very long lease at an attractive yield” and would improve the quality of the firm’s portfolio.
"In this ongoing low interest rate environment, we continue to be attracted to sustainable real estate which can deliver reliable, repetitive and growing income returns”, the CEO said.
In a note, analysts at broker Liberum maintained their ‘hold’ rating and 180p price target on the stock saying the warehouse acquisition, in addition to the £415mln purchase of property company A&J Mucklow in May, added to a “well-located portfolio” which would enhance the company’s outlook.
In early trading on Monday, the shares were 0.4% lower at 200.8p.