Tritax Eurobox and Nordic developer MIGS acquire 95,000sqm of development land for €21.4m in Malmo and set out to create Tritax’s first speculative development project announced the company on Wednesday.
Tritax EuroBox is a REIT which invests in high-quality, premium logistics real estate across continental Europe. It has engaged in a speculative development project with established Nordic developer MIGS to acquire 95,000sqm of development land for €21.4m.
The project is a brownfield redevelopment prospect in a key Swedish logistics market, the Fosie industrial area south of Malmo, where development land is scarce.
Given its location between Malmo’s two major ring roads, which provide good linkages to the rest of Sweden and Denmark, demand from tenants and occupants in this highly sought-after neighbourhood is significant.
The current occupant, Atria Firm, a renowned Scandinavian food manufacturing group, is selling the property.
Until their planned relocation in February 2024, Atria Group will continue to use the existing site and pay a rent of €1.25m per year. This will allow for the site’s reconstruction to begin, with a completion date of early 2025.
Nearly 60,700sqm of prime logistics space will be built on the 95,000sqm property, with an annual rental value of over €4.4m.
The existing asset is valued at €21.4m, with a building cost of €65.3m predicted in the future. The initiative is expected to be worth more than €115m when completed.
The goal of this sustainable development is to offset carbon emissions during construction, with the finished building aiming for a BREEAM Very Good accreditation.
This is Tritax EuroBox’s first development project, with a target completion date of February 2025 at the earliest.
During the planning and permitting phases, this deal allows the company to capture future development earnings while also providing an excellent income yield.
“We are delighted to be announcing our first development project, located in one of the most sought after logistics markets in the Nordics. This exemplifies our strategic aim in building up a portfolio of high quality, sustainable logistics assets in prime markets, through partnering with local development specialists such as MIGS, adopting a disciplined approach to development and allowing the Company to access development profits,” said Alina Iorgulescu, Assistant Fund Manager of Tritax EuroBox.
“This is our first off-market deal with MIGS and we are looking forward to developing our relationship with them on future projects.”
“This is the fourth Swedish investment for Tritax EuroBox, bringing our total amount invested in the country to over SEK 1.4 billion. The powerful structural trends in the Swedish market find demand outstripping supply, providing us with long-term embedded value. We see significant potential in this site in southern Malmö, which is experiencing significant demand from occupiers, while available land remains highly constrained.”
Tritax Eurobox shares fell 1% to 103p after the company announced the acquisition of developmental land with MIGS on Wednesday.