Our acquisition strategy is based on the following criteria:
- Location: focus on supply/demand balance;
- Lot size: focus on lot sizes where investors can expect greater yields and returns;
- Tenancy: target flexible short / medium term tenancies to effectively asset manage;
- Opportunity: invest in assets that can be acquired at attractive market prices through market knowledge in order to deliver decent annual returns;
- Financing: gearing levels which must be consistent with the Company’s policy on borrowings and maturity profile of gearing; and
- Overall market conditions: the outlook for the industrial commercial property sector taking into account wider market conditions and sentiment in the sector.
Investing Policy Detail
The Company intends to achieve the Investment Objective by investing in and growing a diversified portfolio of primary and secondary grade industrial and logistics properties within the UK, and by engaging in active asset management to leverage and enhance returns.
The Company will invest in assets that comprise an interest in freehold or leasehold property (other than by way of security), which meet the following criteria:
- UK industrial or logistics properties (typically single let);
- modern (typically post-1980) constructions; and
- representing average lot value across the portfolio at acquisition of less than £10 million (increased by RPI from Admission).
In addition, the Company will seek to invest in properties that have good underlying features in established logistics regions, such as the Midlands’ “Golden Triangle”, including:
- the opportunity for rental growth and out-performance;
- strong tenant financial covenant;
- lease terms focusing on duration and rental growth; and
- positive geographical characteristics, including age and repair, location, building quality, site cover, transportation links, workforce availability and internal operational efficiencies.
The Company may acquire properties directly or through holdings in SPVs and properties may be held through limited partnerships, trusts or other vehicles with third party co-investors.
The Company may invest up to 10 per cent. of its Net Asset Value (at the time of investment) in properties requiring re-development (such as extending, reconfiguring and refurbishing existing assets), with the intention of holding any completed development as an investment.
Investments will not be undertaken speculatively, although the Company may take options over adjacent land/property.
Borrowing and gearing policy
The Company will seek to use gearing to enhance returns over the long-term and, in addition, will seek to fix its borrowing rates. Gearing, represented by borrowings as a percentage of gross assets, will not exceed 50 per cent. at the time of investment. It is the Directors’ intention to target gearing of 45 per cent. of Gross Asset Value in the medium term and to comply with the REIT condition relating to the ratio between the Group’s ‘property profits’ and ‘property finance costs’.
The Company will invest and manage its assets with an objective of spreading risk through the following investment restrictions:
- the Company will derive its rental income from a portfolio of not less than three properties;
- other than any investment properties requiring re-development, the Company will not invest in assets which are unoccupied or not producing income at the time of acquisition unless part of or less than, 10 per cent. of the Gross Asset Value;
- at least 90 per cent. by value of the properties directly or indirectly owned by the Company shall be in the form of freehold or long leasehold (over 60 years remaining at the time of acquisition) properties or the equivalent; and
- the Company will not invest in closed-ended investment companies.
The Directors currently intend, at all times, to conduct the affairs of the Group so as to enable it to qualify as a REIT for the purposes of Part 12 of the CTA 2010 (and the regulations made thereunder).