Schroder UK Property Fund completes £34.10 million Steel Park acquisition

Schroder UK Property Fund has acquired Tata Steel’s UK distribution hub, The Steel Park, Wednesfield in Wolverhampton from Threadneedle Property Investments Management for £34.10 million, reflecting a net initial yield of 9.00%.

The 60 acre site comprises three industrial warehouses, a Headquarters office building and a Study Centre totalling 761,614 sq ft. The entire site is let to Tata Steel UK Limited by way of six co-terminus occupational leases. The leases have c.12 years unexpired and benefit from 2.5% per annum increases compounded and receivable five yearly.
 
James Lass, Fund Manager of Schroder UK Property Fund said: “This purchase forms a key part of our strategy to invest in regional real estate underpinned by the recovery we are seeing in UK manufacturing. We continue to witness a significant yield arbitrage over other parts of the market and anticipate this gap will narrow as we move further into the cycle.”
 
Tata Steel UK is a major producer and distributor of steel for the automotive, construction, energy, rail, and consumer goods sectors and employ 18,500 people in the UK. The Steel Park is the largest Tata distribution facility in Europe and was formerly occupied by Corus prior to their acquisition by Tata in 2007.
 
Knight Frank represented Schroders; Collingwood Rigby acted for Threadneedle.