JSE-listed Sirius Real Estate, which owns industrial parks in Germany and the UK, has agreed to acquire Chalcroft Business Park, in Southampton, in the UK, for £36.5-million, representing a net initial yield of 5.5%, as well as an adjoining 4.5-acre piece of development land with outline planning permission for £4-million.

The business park comprises 267 073 square feet of predominantly warehousing space alongside 126 511 square feet of outdoor industrial storage. The 56-acre site also includes a 1.2-acre solar farm, benefiting from a 2013 government feed-in tariff expiring in 2038, which produces a third of the estate’s power requirements and will support Sirius’s sustainability targets.

The freehold asset is 80% occupied, with the only two vacant units having recently reached practical completion following an extensive refurbishment to a high specification, including solar-panelled roofs.

Further, Chalcroft Business Park has a strategic location north of Southampton, with direct access to the M27 motorway connecting to Junction 14 of the M3. Southampton is a commercial centre and primary logistics hub on the English South Coast thanks to the city’s excellent road, port, rail and air connectivity.

The site is well-maintained and adjacent to One Horton Heath, which is a large mixed-use development that includes 2 500 planned new homes.

The asset will be operated by Sirius’s UK operating platform BizSpace and is complementary to the company's existing site in nearby Fareham, the company said.

The business park currently produces a net operating income of £2.1-million, with a weighted average unexpired lease term of four years to break, while the vacant units should add a further £500 000 to the rent roll once let.

The main estate also presents a number of opportunities for further development including planning consent for approximately 69 000 square feet of new industrial space with the potential to deliver £800 000 of additional rental income.

Sirius has also identified scope to drive value across the rest of the estate by utilising its asset management platform to enhance occupancy and income, capturing the clear reversionary potential, the company said.

Further, the land plot adjacent to the main estate that has also been acquired has outline planning permission for about 40 000 square feet of commercial space, providing a further development opportunity in the future.

Since its £152-million equity raise in July last year, Sirius has successfully acquired over €100-million of income producing properties at an attractive 7.1% average yield. Comprising assets in Carnforth, Munich, Reinsberg, Oldham and now Chalcroft, these acquisitions will add €7.1-million to the company’s yearly funds from operations run rate, once complete.

“The acquisition of Chalcroft Business Park adds a strong, income-generating asset to our portfolio, with strong sustainability credentials and significant potential for further value creation. By leveraging the combined expertise of the Sirius and BizSpace platforms, we aim to enhance existing revenues while unlocking new income streams through hands-on asset management and development,” said Sirius Real Estate CEO Andrew Coombs.

“Since our equity raise last July, we have continued to acquire properties at attractive yields, demonstrating our ability to identify and secure strategic opportunities that drive rent roll growth and, in many cases, also offer interesting additional development opportunities.

“With a robust and active pipeline of prospects across the UK and Germany, as well as additional capital available for investment, we remain well positioned to complete the acquisition programme initiated last summer,” he said.