This Week's London Deal Sheet
The Deal Sheet is a weekly compilation of Greater London and beyond's biggest leases, sales, financing deals, construction updates and personnel moves. Have news you’d like to submit? Email mark.faithfull@bisnow.com.
Supermarket Income REIT has sold its interest in a portfolio of 21 Sainsbury’s supermarkets back to the retailer for £431M.
The sale completes the previously announced acquisition by Sainsbury’s of 21 of the 26 Sainsbury’s Reversion Portfolio properties and concludes the contractual unwind of the portfolio structure.
Sainsbury’s has entered into new 15-year leases on four of the five remaining stores, with five yearly open market rent reviews and a tenant break option in year 10. Following completion of the transaction, the REIT has an option to acquire these four stores for a net consideration of £28M. It is expected that the one remaining store will be sold at vacant possession value.
The REIT’s investment in the SRP has generated an attractive return for shareholders, the company said. Following this transaction, it is estimated that the investment will have provided a money-on-money multiple of 1.9x and an internal rate of return of 30%.
The total proceeds will be received in three tranches; £279M will be received on 17 March 2023 and £117M on 10 July 2023. The third tranche of £35M is conditional on the sale of the remaining five stores in the SRP.
FINANCE
M7 Box+ REIT plc will try to float on the IPSX, the stock exchange for single buildings or real estate portfolios. As of 31 December 2022, the company’s property portfolio was valued at £229M.
The property portfolio comprises seven e-warehouse properties located across the UK. As at 31 December 2022, the 812K SF portfolio was let to a diversified base of 40 occupiers, with a contracted rent of £16M a year, 67.7% of which is contracted to the portfolio’s top 10 tenants.
In Q4 2022, rent collections stood at 98.8%, the portfolio was 100% occupied and it had a weighted average unexpired lease term of 4.81 years.
The company will invest in the existing portfolio of value-add e-warehouse assets across the UK.
"The strategy takes advantage of the pricing arbitrage between industrial and e-warehousing assets," M7 said in a release. "This historic lack of distinction between generic retail assets and retail warehouses has led to mispricing for these fundamentally good assets, while the industrial asset class in recent years has witnessed significant yield compression and historically high capital values."
M7 defines an e-warehouse as a warehouse with enhanced planning uses, meaning there is the flexibility to change its use in the future.
***
Ediston Property Investment Company, the listed company with a £203M portfolio of regional UK real estate, will put itself up for sale or seek a merger with a fellow REIT.
The company said it has appointed Investec and Dickson Minto to undertake a strategic review. The board has a preference for structuring a merger with one or more REITs, the company said. But it will consider all options available, including selling the entire share capital of the company; undertaking some other form of consolidation, combination, merger or comparable corporate action; and selling the company's portfolio or subsidiaries and returning money to shareholders.
LEASING
LMA is expanding its presence on the Here East campus, based on the Olympic Park in east London, by 70K SF, enabling it to increase its offering and welcome 1,500 new students to the site.
The media, music and performing arts institution, co-owned by global performer Robbie Williams, already has 30K SF at Here East, where it offers six BA (hons) degrees in subjects such as musical theatre and dance performance.
Here East, the innovation campus created by clients of Delancey, is also home to a number of global technology companies, startups, academic institutions and creative businesses, including, Studio Wayne McGregor, FiiT, MatchesFashion and Ford Mobility.
About 5,400 people — 3,800 who work for businesses on-site and 1,600 who study — are regularly based at the campus.
DEVELOPMENT
Mission Street, a specialist investor, developer and operator for the science and innovation sector, and BentallGreenOak have started work to deliver The Press, Foxton, a new 100K SF life sciences facility in the Cambridge Southern Cluster
The joint venture will transform a 7.8-acre site into a science and innovation campus by repositioning a former printing press combined with new-build.
Phase 1 will create 16K SF of fully fitted lab and office space across two units. Due for completion in Q3 2023, it will be one of just a handful of life sciences schemes coming online this year. Phase 2, which will see the delivery of a newly constructed 65K SF building, is due to complete in summer 2024.
According to market data tracked by Mission Street, there is demand for over 1M SF of lab space in Cambridge; only 10K SF is currently available.
The Mission Steet-BGO joint venture has a development pipeline of more than 1M SF of lab and office space in key strategic locations. The joint venture has also acquired a 23-acre site to the east of Central Cambridge where it plans to create an urban science and innovation district that will serve the region’s startups and scale-ups.
PEOPLE
Catella APAM, the specialist UK and Ireland asset manager with current assets under management of £2B, has promoted Melissa Baldwin and Sinéad Kenny to joint managing directors.
Baldwin joined in 2016, with responsibilities for operations and finance, and was appointed a director in 2017. Kenny has been with APAM since 2013 and joined the board in 2019, with responsibilities for client services and business development.
William Powell, a founding shareholder of Catella APAM is stepping down later in the summer and will leave the business he founded with Simon Cooke in 2009 to move to Australia. Cooke will support Baldwin and Kenny "to deliver ambitious growth plans through to 2029," Cantella APAM said.
Catella APAM operates with 70 staff from London, Manchester and a recently opened location in Dublin.
