The investment of SEK 402 million reflects a net initial yield of 4.0% based on the income from a 12 month target rental guarantee of SEK 16.4 million (€1.6 million1) from completion of construction. From completion of the land purchase and during the construction phase, the Company will receive from the developer an income return equivalent to the agreed net initial yield.
This is the company’s third investment in Sweden and second in Rosersberg, one of the most established Swedish logistics hubs, just north of Stockholm. Held freehold, this 27,562 sqm site will accommodate a 17,832 sqm prime logistics facility consisting of two separate units.
Strong ESG credentials will be at the forefront of the asset’s design and build. The development is targeting a minimum BREEAM Very Good certification, and the construction will include a range of energy saving initiatives and staff wellbeing measures.
The development is being undertaken by Verdion, a highly experienced European industrial and logistics real estate specialist. Construction is due to commence in June 2022, with practical completion targeted in May 2023.
Verdion is also developing the company’s adjacent development asset in Rosersberg, which was acquired in September 2021 and received a building permit in December 2021. Construction at this site will commence in February 2022 and discussions are already underway with potential occupiers.
The site is strategically situated close to Stockholm Arlanda Airport, on the E4 motorway to Stockholm city centre. Given its strategic location, occupier demand for logistics space in Rosersberg is amongst the highest in Sweden and its importance as a hub is expected to increase further in the coming years.
Due to the strength of the local leasing market, the Ccmpany is confident that it will be able to lease the units quickly and benefit from any increased value that a new lease may create. Verdion will assist the Company with the letting based on pre-agreed leasing criteria with an incentive mechanism. Verdion will also be retained as asset manager.
Alina Iorgulescu, Assistant Fund Manager of Tritax EuroBox, commented:
“This investment reinforces our shift to a higher proportion of value add assets by investing in development opportunities alongside established development partners. We are particularly pleased to be increasing our exposure to the Stockholm logistics market where we are seeing growing occupational and investor demand. We have already made good progress at our adjacent asset, obtaining the building permit in December, meaning we are looking forward to starting on site in a few weeks’ time.
This is also our fourth off-market deal with Verdion demonstrating our close relationship, bringing forward these ESG led, high quality assets in key locations where land supply is constrained.
Today’s off-market funding is at an attractive yield, which also offers the opportunity to capture the strong rental and capital value growth evident in this prime logistics market and to deliver sustained value to our stakeholders.”