M7 Real Estate has sold a retail warehouse in Edinburgh, Scotland, to Urban Logistics REIT for approximately €15.2m (£13.2m) on behalf of the M7 Box+ II fund. The sale represents a net initial yield of 6.2%. The asset, in Milton Link, comprises c. 77,000ft² and is occupied by The Range, the retailer, and also has a Costa Coffee “drive-through”. M7 acquired the asset in December 2020 as part of a wider portfolio purchase and quickly identified the asset for disposal at an enhanced value.
This sale will be accretive to the performance of M7 Box + II, which is invested in a portfolio of carefully selected UK retail warehouses with potential for future rental and capital growth, through active asset management and an anticipated re-pricing of the asset class as the logistics function of these properties in the last mile delivery chain grows. Following the sale, the Fund’s portfolio will comprise eight assets with a total area of circa 915,000ft².
Euan Burns, Divisional Director at M7, commented: “We are really pleased to have completed this sale which has generated a strong performance for the Fund and will enable us to pursue other value-enhancing opportunities. The sales process demonstrated a strong demand for well-located retail-led units which lend themselves to urban logistics. For this reason, we continue to view the asset type as one of the most interesting in the real estate sector due to its potential for re-pricing.”