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Warehouse company which counts Argos as a tenant plans £150m float

Rhiannon Bury
Amazon and other retailers need warehouse space close to customers, to fulfill demands for ever-quicker deliveries - Bloomberg

A property company which provides logistics and warehouse space for Argos, Boots and Amazon is to float part of its business on the London Stock Exchange in order to raise up to £150m.

Warehouse Real Estate Investment Trust (REIT) is a new company spun off from existing industrial property business Tilstone with a seed portfolio of 27 industrial buildings.

The firm is expected to launch its intention to float on Aim this morning [Monday], with an initial offering of 150 million shares valued at £1 each. It is understood to be targeting a dividend yield of 5.5pc in its first year.

The firm plans to capitalise on the booming industrial property market, using the money it raises through investors to buy more buildings, especially in locations close to urban centres.

Tesco and Sainsbury's want to offer 1 hour deliveries Credit: DARREN STAPLES/Reuters

This has become increasingly important for retailers in recent years, as the promise of shorter delivery times means they need to have more, smaller locations within a short distance of people’s homes and workplaces.

Both Sainsbury’s and Tesco have announced plans for one-hour delivery for certain items, and Amazon trialled the idea as far back as 2015.

Demand from online retailers has fuelled rapid expansion in the sector: in 2007 they accounted for just 1pc of take up, which had grown to 29pc by 2016. Tilstone’s current tenants also include high street retailers such as Mothercare and Argos.

Earlier this year, property agents Colliers International found that London has just eight months’ worth of industrial space remaining, such is the strength of demand and lack of supply.

It is understood that members of Tilstone’s management company have invested in the new entity, although it will be managed externally.

The industrial warehouse space is currently dominated by large listed companies such as Segro, Trixtax and LondonMetric, although in the past these firms have tended to build more so-called big box buildings, which are typically far larger and tend to be situated away from towns and cities.

Mike Prew, analyst at Jefferies, said this week that “logistics is a hot sector getting hotter and going mainstream”, with more than £4bn worth of industrial property changing hands in the first half of this year.

News of Warehouse REIT’s planned float comes after a strong second quarter for the London IPO market. In the three months to the end of June, 24 IPOs raised just over £2bn, an 83pc increase in value on the same period last year.

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