Tritax Big Box, the real estate investment trust, has acquired the Ocado and Morrisons distribution facility at Birch Coppice Business Park, Dordon, Birmingham for £92.3m. The facility is operated by Ocado and serves both Ocado and Morrisons online retail businesses.
The price reflects a net initial yield of 5.25% on the asset acquisition. The purchase is being funded from equity with Morrisons acting as a guarantor. The investment has been acquired with an unexpired lease term of approximately 21 years (with no tenant break), subject to annual upward-only rent reviews indexed to the Consumer Price Index and capped at 3.5%.
The facility was purpose-built to a high specification in 2012 for Ocado and comprises one of its four principal temperature-controlled customer fulfilment centres. The building has a gross internal area, including the mezzanine floors of over 700,000 sq ft. The premises has already benefited from significant capital investment incorporating a high level of automation.
The property is located in one of the UK’s rail connected distribution parks, with direct access to the Birmingham Intermodal Freight Terminal. The property also has airport and motorway connectivity with close proximity to the M6, M1, M69 and M6 as well as Birmingham International and East Midlands airports.
Colin Godfrey, partner of Tritax, said: “The acquisition of this Morrisons’ distribution facility, operated by Ocado, builds upon our strong working relationship with both retailers. The property will provide long-term income in one of the most sought-after locations within the ‘Golden Triangle’, providing access to 85% of the UK within 4.5 hours.”