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Liberty Property Buys UK Warehouses, Logistics Centers for $144 Million to Complement US Holdings

Purchase Comes Amid Global Demand for U.K. Industrial Property
October 2, 2018
St. Davids Way Bermuda Park in Nuneaton.

Liberty Property Trust, a Malvern, Pennsylvania-based real estate investment trust, bought a portfolio of warehouses and logistics centers consisting of 1 million square feet in the United Kingdom from South African-based Leftfield Properties for $144 million as part of a strategy to expand its overseas industrial ownership to complement its U.S. holdings.

The portfolio is made up of seven warehousing and distribution facilities in the Midlands and the North West and two properties on the M8 motorway, just east of Glasgow, Scotland.

Liberty’s U.K. warehouse portfolio is a balance of standing leased assets, including this new acquisition, and a development pipeline which together extend to about 4 million square feet. Liberty said its U.S. industrial and warehouse operation owns and manages a portfolio of 100 million square feet and touches almost three-quarters of the U.S. logistics market.

Andrew Blevins, managing director at Liberty Property Trust’s U.K. operation, said the acquisition "represents a major step forward in our ambition to continue growing our U.K. warehousing and logistics activity and builds great synergy with our operations in the U.S."

Included in the just-purchased portfolio are a warehouse called St. Davids Way on Bermuda Park, between Nuneaton and Coventry, and warehouses in three Greater Manchester submarkets - Warrington, Oldham and Stockport.

In addition, the portfolio includes two warehouse properties on the Eurocentral industrial estate in Glasgow and the Artemus hub spanning 72,000 square feet, and a major Tesco supermarket distribution facility in Newport South Wales.

The portfolio has been assembled by Leftfield since 2010 to capitalize it said Tuesday "on structural shifts in the U.K. logistics market, particularly the growth in internet retailing. The facilities fulfill both national and last-mile distribution roles with good access to motorway links and major urban centers."

The acquisition is part of a drive into U.K. logistics by Liberty, which recently bought a 10-acre site for development on Brackmills, Northampton.

The Leftfield assets have a total passing rent of $8.3 million with a weighted average unexpired lease term of just under 4.5 years, offering Liberty "significant opportunities to add value in the near-term through its in-house asset management and leasing expertise," according to Liberty.

Tenants include major retail and 3PL operators Tesco, DHL and Great Bear as well as XPO, a business partner of Liberty in the United States.

Nico Fourie, chief executive at Leftfield Advisors, said “we positioned ourselves ahead of the growing demand for a new specification of well-located warehouse that support changing consumer habits in the U.K. We have taken the time to construct a portfolio of quality assets that support this demand, leading to committed tenants and strong investor interest."

He added that the deal lets the company "implement the next stage in our investment strategy, where we will focus on assets that enable us to exploit the convergence between retail and logistics.”

The sites add "further mass to our existing North West and Midlands built and development portfolio and are ideally placed to capitalize on this growth sector," he added. "We’ll be drawing on Liberty’s longstanding experience in the U.S., as well as the deep expertise within our U.K. team, to maximize this strategic position and drive value from the properties through creative and diligent asset management.”

Liberty was advised by DTRE, a property consulting firm.

The sale comes amid investor appetite for U.K. industrial portfolios, particularly from global players looking to build platforms.

Yesterday Ascendas Reit, the Singaporean REIT, bought a second major UK industrial portfolio of 26 logistics properties.

The acquisition follows its purchase of 12 industrial assets in July, the so-called Project Owl portfolio, from Oxenwood for $269 million, further expanding its footprint beyond Asia and Australia.

In addition, North American real estate investor and developer Scannell Properties has recruited CBRE's Amaury Gariel to lead an expansion into European industrial markets including the United Kingdom.

Leftfield said it will "identify, acquire and develop assets that meet underlying changes in consumer behavior. In line with this strategy, Leftfield recently acquired Caledonian Retail Park, Wishaw."

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