Slate Asset Management, the Toronto-headquartered global investor and manager focused on real estate and infrastructure, has bought the Morrisons regional distribution centre in Bridgwater, Somerset, in the South West from Aviva Investors.
The hub is a 780,000-square-foot distribution facility that is fully leased by Morrisons, the UK grocer, on an index-linked and triple-net basis.
The price has not been disclosed but is understood to be around £57 million, reflecting a 6.75% net initial yield. The deal is Slate's first UK industrial acquisition.
The property is Morrisons’ only distribution facility in the South West of England and has modern sustainability credentials, with over 4,000 rooftop solar panels, rainwater harvesting systems, and on-site recycling. Slate said Morrisons also continues to actively invest in upgrades and technologies.
“This property meets all the key criteria we look for in income-generating essential real estate investments,” said Brady Welch, co-founding partner at Slate in a statement. “It’s a modern, sustainably built facility underpinned by a leading national grocer. The property’s strategic location makes it uniquely well positioned to efficiently distribute everyday goods to millions of consumers. It’s an exciting acquisition for us in the UK, where we continue to actively evaluate opportunities across the essential real estate sector.”
Slate Asset Management said last month it plans to increase its holdings in several commercial property types as it distances itself from the office sector, as reported. The Toronto-based company said recently it would terminate its management deal with publicly traded Slate Office REIT and is further decoupling itself from the office sector by selling an 11-property portfolio in Canada partially owned by the parent company.
Slate has been an active investor in the European real estate market since 2016, having transacted on approximately 1,000 commercial properties across seven countries, it said. Slate said its focus on European essential real estate spans the risk spectrum, with value creation and income strategies, targeting grocery, pharmacy and food logistics.
Although the hub has been sold by Aviva, Morrisons has been no stranger to selling real estate this year as it tries to reduce its debt pile.
In September, the Bradford-based national supermarket chain agreed a £331 million sale-and-leaseback of its stores, as reported.
In April, the supermarket sold 337 petrol forecourts and more than 400 other sites linked to its car parks across the UK for £2.5 billion. The brand said it would use cash proceeds of £1.8 billion to "strengthen its capital structure and repay certain of its debt obligations".
Morrisons was bought by US private equity firm Clayton, Dubilier & Rice in October 2021 for £7 billion.
Cushman & Wakefield, Gowling WLG and KPMG advised Slate on the transaction, which is expected to close in December 2024.