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January 6, 2010

FSP Completes Hatrick of Deals in the Black Country

Franck-Steier Price LLP has recently concluded a hatrick of industrial investment sales on George Henry Road, Great Bridge, on behalf of an institutional investor. The sales totalled £3.62 million and comprised a modern industrial estate and two detached industrial units. Demand for the three investments was significant primarily due to the strong location, next to the A41 Black Country New Road and the age and specification of the units.

Link One Industrial Estate comprises 10 modern units arranged in four terraces totalling 7,615.48 sq.m (81,973 sq.ft). The property is let to seven tenants with three units vacant producing a total current rent of £261,299 per annum. The purchase price of £2,420,000 represented a net initial yield of 10.21%. Investor interest in the estate was considerable despite a weighted average unexpired term of only 1.6 years. Offers received were from a mixture of institutions, property companies and private individuals. The estate was sold to Kindale Ltd.

The two other sales comprised two single let modern industrial units both fronting onto George Henry Road. The units are let to Cromwell Group and Tulip for terms of seven and three years respectively. Private investor interest in the units was substantial with a total of nine offers submitted. Both tenants however out bid the investor competition to secure their units for £800,000 in the case of Cromwell and £400,000 for Tulip reflecting yields of 8.45% and 8.88%. Cromwell and Tulip owner occupy many of their sites in the UK and saw this as an ideal opportunity to add to their current holdings.

Ben Blackwall at FSP comments ‘Despite the short term income profile on Link One Industrial Estate there was good interest in the investment. We have seen an increase in investor demand for multi-industrial estates over the last few months with a focus on modern accommodation and well located estates which offer a range of unit sizes and require little or no capital expenditure over the short term.’

‘The private investor interest in the two detached units was from cash buyers seeking higher returns than the returns their bank deposits were providing. Despite the lease lengths of only 3 and 7 years investors were comfortable bidding due to the covenants in occupation, the strength of the location and age of the buildings.’

‘These deals have capped off an excellent year for FSP with 22 transactions completed in 2009.

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