Council pays £45.3m for Merseyside distribution warehouse

Continuing its policy of investing in commercial assets to mitigate the effects of austerity Warrington Council has acquired the Haydock site and will make £2.3m a year in rental income. Tony McDonough reports

Haydock
Movianto occupies the 377,000 sq ft distribution unit at Haydock Industrial Estate

 

Warrington Council has paid £45.3m for an industrial unit in Merseyside continuing its policy of investing in commercial assets to mitigate the effects of austerity.

The authority has acquired the 377,000 sq ft distribution unit fronting onto the M6 motorway in Haydock Industrial Estate, currently occupied by Movianto, a global healthcare logistics services company.

Rental income from the warehouse will net the council around £2.3m a year from Movianto, which has a 15-year lease on the site. This represents a net initial yield (rental income as a percentage of capital value) of 4.82%.

Warrington Council’s cabinet agreed to go ahead with the purchase in September. Council leader Russ Bowden said at the time: “Should councils be making investments in property and acting in a commercial way? My honest answer, hand on heart, is no. But, equally, councils should be getting properly funded for the very important job they are asked to do.”

As Government austerity has has a devastating impact on local authority funding, councils have been forced to become more imaginative and seek new sources of funding. Many see investment in commercial property as a good bet.

Liverpool City Council has pursued a similar policy with investments in Liverpool John Lennon Airport, recently sold for £19m, and Liverpool Central Shopping Centre which it acquired last year. However, critics say it is not appropriate for council’s to risk public funds on risky commercial investments.

Agents at B8RE acted on behalf of A S Kendall and S R Thomas of Moorfields Advisory as Joint Administrators of Industrial North West, on the disposal of the industrial unit at Haydock. Simon Wood of B8RE said: “This sale reflects the continued institutional demand for well let prime logistics properties located in the North West of England.

“Haydock Industrial Estate is a recognised industrial location not only for SME type businesses, but also larger logistic companies as proven by the amount of large companies basing their logistics operations here, including Amazon, Sainsburys, Bookers amongst others.”

Matt Stretton of Knight Frank, who acted on behalf of Warrington Council, added: “We see this as an absolute prime industrial location which will continue to see more industrial activity and rental growth.”

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