Target Information

ALMCOR and St Francis Group have successfully sold an extensive 80-acre warehouse project located at Horizon 29 in Derbyshire to BentallGreenOak (BGO) and Equation Properties for nearly £40 million. This site is slated for the development of a logistics project spanning 1.2 million square feet, highlighting the growing demand in the logistics sector.

The transaction marks a significant milestone for the joint venture, previously known as iSec, as they capitalize on the value of land acquired in 2012. The proceeds from the sale amounting to £39.9 million will be strategically reinvested into ongoing large-scale projects, including the Thames Enterprise Park in Thurrock, further underscoring the maturity and attractiveness of the site.

Industry Overview in the UK

The logistics sector in the UK has seen rapid growth in recent years, driven by increasing online shopping and the need for efficient supply chain solutions. The surge in e-commerce has necessitated the establishment of vast warehouse spaces close to major transport routes, particularly in areas like Derbyshire, which benefit from proximity to the M1 motorway.

As companies adapt to evolving consumer behaviors, demand for logistical services is expected to remain robust. Industry experts highlight a significant constriction in available warehousing space, prompting firms to seek and develop new sites to meet their operational needs.

In Derbyshire, the region's strategic position enhances its appeal for logistics investments, making it attractive not only for new projects but also for upscale upgrades of existing facilities. This trend amplifies the opportunities for developers and investors within the area, contributing to the rising trend of speculative builds.

The regulatory environment surrounding commercial real estate, particularly developments with planning consent like Horizon 29, supports investment through streamlined approval processes, thus further enticing capital flow into the logistics sector.

Rationale Behind the Deal

ALMCOR and St Francis Group's decision to sell the Horizon 29 site stems from a strategic move to unlock capital and reinvest in new projects. The opportunity to sell at a favorable valuation aligns with their long-term growth strategy, particularly as they focus on the Thames Enterprise Park development.

The ongoing increase in demand for logistics spaces in the UK, coupled with the existing infrastructure already established at Horizon 29, made this an opportune moment for the joint venture to divest. This deal not only allows for immediate financial reinvestment but also opens avenues for the advancement of additional significant projects in their portfolio.

Information About the Investor

BentallGreenOak is a well-regarded investment management firm that specializes in commercial real estate across the globe. With a strong focus on logistics and industrial properties, the firm has seen substantial growth in its UK logistics portfolio, especially following its acquisition of a 5 million square feet pipeline alongside Equation Properties in 2021.

The firm’s approach to logistics investments is data-driven and strategically aligned with evolving market demands, positioning them as a key player in fostering growth in the UK warehousing landscape. Their history of successful transactions, complemented by their partnership with Equation, strengthens their commitment to developing high-quality logistics assets.

View of Dealert

This deal illustrates a strategic alignment of interests between the sellers and the buyers. With the logistics sector poised for continued growth, investing in a sizeable logistics project like Horizon 29 is likely a sound decision. The capital gained by ALMCOR and St Francis will enable further investment into large-scale developments, which can yield high returns in an increasingly competitive market.

Moreover, BentallGreenOak's acquisition fits well within their portfolio expansion strategy. Given the constrained market conditions, securing planning consent and an existing infrastructure will facilitate the speedy execution of development projects, thus maximizing potential returns.

Overall, the timing of this transaction aligns with ongoing industry trends, making it a well-calculated move by both parties. Factors such as location benefits, existing infrastructure, and market demands support the notion that this investment could prove to be prosperous in the near future.

In conclusion, this deal represents a robust strategy for both the sellers and buyers, reflecting the dynamism of the UK logistics sector. It highlights a keen eye for opportunity and a commitment to evolving with market conditions, making it a commendable investment decision.

View Original Article