WARRINGTON Borough Council has bought Eddie Stobart’s distribution HQ at Stretton for £26.1m, a 4.35% net initial yield.
The distribution HQ totalling 164,048 sq ft, has been purchased from Ropemaker Properties and adjoins the M56 at the established Stretton Green Distribution Park, Warrington.
Ropemaker originally bought the building in 2013 for £16m by way of a sale and leaseback from Eddie Stobart until July 2033 with fixed annual increases equivalent to 1.5% pa.
The 17.59 acre site incorporates a distribution warehouse, vehicle maintenance unit, head office and expansion land.
Warrington Borough Council used its in house property team for the purchase.
The Council’s executive Board approved the proposal to acquire the property for financial investment purposes to support the medium term financial plan and reasons of economic growth.
Members of the executive Board were told the purchase supported the Council’s Property Investment Strategy and seeks to deliver the ambition to become financially sustainable through longer term planning as set out in the Council’s Corporate Strategy 2018-2020.
The property acquisition is an invest to save scheme, generating a commercial return to the Council.
The reasons outlined for purchasing the property, which will yield a rental income of over £1m a year are
•To provide a secure, net income stream for the Council
•To bring another Warrington property asset into Council ownership and open opportunity for future regeneration
•To enhance the Council’s position as a major land owner with the ability to influence the growth of the future development of the town
•The Council is seen to be acting proactively and taking leadership, investing in the town to promote economic development
•To enable the Council’s ambition to become financially sustainable through longer term planning
•To assist in delivering the raised target for property income
Last year the council purchased Birchwood Park for an estimated £200m which has returned a yield of around £5m in year one.
Meanwhile Stobarts have submitted a planning application to build a new state-of-the-art warehouse facility on Green Belt land opposite their existing HQ.
If the application by developer Liberty Properties for land at Appleton Thorn is approved by the Council’s planning committee, the 630,000ft2 building will create around 480 permanent jobs on site and support another 250 off site.
The land earmarked for development
2 Comments
Gary, I think we’re all grateful to have you providing an alternative news source, but when you present a council press release like this you – arguably – give legitimacy to what looks like quite an iffy business proposition.
I hope you’ll question WBC on this and other deals. It really would be appreciated – you’re our best hope of holding the council to account.
Apologies Gary, now that you’ve clarified that this wasn’t a press release I’m much happier. When you Google this stuff, Warrington Worldwide articles show up as ‘Gary Skentelbery (press release)’, which probably confuses things.
I don’t like this deal on several fronts. As a business proposition, it doesn’t stack up – has that site really gained so much in value? What happens to our margins when interest rates rise? How well have we factored in maintenance and depreciation?
And then the really big question – how can the Council possibly take an unbiased, objective position over the planning application for expansion? Stobart now has a loaded gun to the council’s head.