Forward funding acquisition of 28,249 sqm logistics asset in prime location in Northern Italy for €24.39 million.
Tritax EuroBox plc (“Tritax EuroBox” or the “Company”) (ticker: EBOX (Sterling) and BOXE (Euro)), which invests in high-quality, prime logistics real estate strategically located across Continental Europe, announces that conditional contracts have been entered into to acquire land and provide forward funding for the development of a new highly specified and sustainable logistics warehouse facility in Settimo Torinese near Turin, Northern Italy for a total consideration of €24.39 million (the “Settimo Torinese Proposal”).
The property will be developed by LCP IT DC 3 S.r.l. (“LCP Milan”), a wholly owned subsidiary of LCP Holdco Lux S.à.r.l. (“LCP HoldCo”) and part of the Logistics Capital Partners group of companies, one of the Company’s main development partners, under a fixed price development contract. The construction of the facility is expected to complete in 2022.
The high quality and sustainable cross-docked logistics warehouse facility will comprise a gross leasable area of approximately 28,249 square metres (sqm) and will be arranged as two equal sized units in one single building, capable of being leased either as a single building or two separate buildings. The facility is expected to achieve a BREEAM Very Good rating and to benefit from roof mounted photovoltaic panels.
The facility will be adjacent to the A4 ‘Turin-Trieste’ motorway, east of Turin, Italy’s fourth largest city. The Italian logistics market is currently characterised by record levels of occupational take up, particularly in the northern part of the country, as well as vacancy rates at a low level of around 2 per cent.
The acquisition, currently unlet, benefits from a rental guarantee provided by LCP Milan amounting to approximately €1.277 million from completion of the construction of the facility. This amount is based on 12 months of the estimated rental value of the facility, assuming a rent of €45 per sqm on the warehouse space. In addition, the photovoltaic panels are expected to provide income of €45,000 per annum. The transaction reflects an accretive net initial yield of 4.8 per cent. after purchase costs and non-recoverable expenditure.
As LCP HoldCo is considered as a related party to the Company under the Listing Rules, the Settimo Torinese Proposal is subject to shareholder approval. A circular containing further information about the proposed transaction and a notice convening a General Meeting of the Company at which shareholders will be asked to vote in favour of a resolution to approve the Settimo Torinese Proposal will be posted to shareholders as soon as practicable.
Nick Preston, Fund Manager of Tritax EuroBox, commented:
“Continuing the deployment of proceeds of our €230 million equity raise in March this year and of our subsequent €500 million green bond issuance in June 2021, we are delighted to enter into conditional contracts to acquire our second asset in Italy which complements our existing asset near Rome and further reinforces the Company’s ESG credentials. This development funding provides us with the opportunity to add further value to the asset in line with our evolved investment strategy. We are pleased to be working with our partners, LCP, who have deep knowledge of the Italian logistics market and an extensive development pipeline which provides us access to well-located, high-quality logistics assets with strong sustainability characteristics at attractive yields on cost.
Italy, like other markets, is seeing growing online retailing and supply chain optimisation, leading to increased demand for the best located logistics properties. The pandemic has accelerated these trends and further enhanced the prospects for the sector. We remain confident that these long-term positive structural tailwinds, combined with our high-quality portfolio and our ability to unlock value from it, will help ensure that we will continue to deliver shareholder value.”