Today, United Kingdom-based warehouse investor Warehouse Real Estate Investment Trust (REIT) received the contract for acquisition of Glasgow International Airport’s (GLA) Air Cargo Center from Airport Industrial Nominees Ltd. Warehouse REIT paid £11.1 million for the property, which represents a net initial yield of 6.7 percent and a revisionary yield in excess of 7 percent. GLA currently holds a ground lease of the property that will expire in 2148.
The 150,000-square-foot Air Cargo Center was built in 2000 and is located adjacent to the GLA. The center is comprised of two separate warehouses that host eight units that are leased to five separate companies – including Nippon Express UK Ltd.; PJH Group Ltd.; and Alpha LSG Ltd. The weighted average unexpired term of these leases is 6.3 years, with 4.1 years until the first break. The center generates a total net rent of £788,086 per year, and handled 13,000 tonnes of airfreight in 2018, according to Warehouse REIT.
Warehouse REIT’s investment could be rewarding in the face of a potentially “hard Brexit”, as stakeholders are making moves to position themselves advantageously, given rumors for a potential increase in demand for logistics services and also to mitigate negative impacts to operations. GLA has already received some attention, as U.K.-based forwarder Davies Turner doubled its warehousing capacity at the airport.
Situated at roughly the midpoint between the United States and Middle Eastern markets, GLA is in close proximity to multi-modal transport options and is open 24/7 for dedicated cargo handling.
GLA itself has been making plans over the past few years to grow its cargo business, and in its Strategic Plan 2017-2022, GLA said it is working to do this by identifying methods to balance airlines’ inbound and outbound cargo at its airport. The airport established a team to assess markets in its region as well as cargo flows at GLA over the course of 2017 and 2018. Results of the study are yet to be publicized, but fish was identified in the Strategic Plan as a potentially lucrative export market to balance inbound cargo at the airport. In July 2018, GLA facilitated FloatPac’s transport of 38,500 fingerling salmon to Dubai.