Segro is taking full control of the Airport Property Partnership (APP) from joint venture partner .
The UK real estate investment trust (REIT) is paying Aviva Investors 拢365m (鈧�418m) for the remaining 50% stake in APP, a portfolio of property assets near London鈥檚 major airports.
The deal has been funded by Segro through a 拢573m rights issue, which the listed company is also using for its development pipeline.
Segro, which had held half of APP since 2010, said the deal is part of its strategy to build scale in its core markets and that having full control would improve operational flexibility and future decision-making.
Segro鈥檚 chief executive David Sleath said: 鈥淲e believe now is the right time to take full control and ownership over APP in which we see a number of opportunities to realise further value from its unique portfolio in the short and long term.鈥�
Around 87% of the 拢1.1bn portfolio, which generates 拢42m in annual rent with 7.5% vacancy, is near Heathrow.
鈥淲e look forward to pursuing our development plans, taking advantage of strong occupier demand for facilities around Heathrow from customers needing rapid access both to the airport and to central London,鈥� Sleath said.
鈥淥ur Heathrow portfolio is one of the jewels in our crown and we are delighted to be able to add scale in this supply-constrained market.鈥�
As well as 拢216m in cash, Segro said it is giving Aviva Investors four London assets and a Portsmouth manufacturing facility worth a total 拢149m. The five assets covering 70,000sqm generate 拢6m in annual rent.
Ed Casal, chief executive for real estate at Aviva Investors, said: 鈥淲e see real upside in the assets we have acquired through this transaction, and are confident they will contribute strong performance for our clients.鈥�
Segro took a 50% stake in APP in June 2010 and acted as asset manager for the joint venture, with Aviva Investors as fund manager.
Casal said: 鈥淭his is a very positive deal for our clients, and in line with our broader real estate strategy to have direct control of assets and focus on core markets where we are able to drive performance through expert local market knowledge.鈥�
Segro raised 拢325m via a placing in .
At the time, Sleath said it was 鈥渢oo early to assess the longer term impact of the UK vote to leave the EU鈥�.
Speaking to IPE Real Estate , Segro chief investment officer Phil Redding said: 鈥淭he picture over the past few years has been really good.鈥�
Redding pointed to strong investor demand for good-quality warehousing. 鈥淢arket fundamentals remain very strong, yields have fallen and the amount of investors targeting the UK remains really high,鈥� he said. 鈥淚t鈥檚 a favourable backdrop.鈥�
Read more on the logistics sector and Segro .
