- What Jaguar Landrover is close to forming a joint venture with Prologis to build its new 1m sq ft warehouse in Solihull
- Why It will be used as a logistics operation centre
- What next The car firm’s £300m Appleby Magna campus will be the next major funding opportunity backed by the company
Prologis is close to forming a joint venture with Jaguar Landrover to build its new 1m sq ft warehouse in Solihull, React News can reveal.
The 50 acre site at Damson Parkway, adjacent to JLR’s existing factory, is to be used as a logistics operation centre.
A tricky process
The development and funding of the scheme has been complicated by a variety of factors.
Jaguar Landrover had first run a process searching for different partners to develop and to fund the development.
The initial proposal saw JLR build in limited upward movement in rents during the course of its lease, put in place a lease term that was not long enough to be attractive to some prospective funders and an option to buy the asset back at the end of the lease at a reduced value. The planning consent for the asset also requires that it must be occupied by JLR alone.
These factors, combined with JLR publicly voicing concerns over a hard Brexit and the impact on its business in the UK, as well as JLR’s subdued performance globally over the past year, made the initial proposal complex to fund.
An agreement is now close to being signed with Prologis to form a joint venture to help fund and to undertake the development on the land owned by JLR, with uplifts on the lease increased and the buyback clause removed.
The anticipated £140m end value of the project would reflect a yield of around 4.5%. It is understood that there is no plan to sell the asset on completion, which is expected towards the middle of next year.
JLR in focus
The strength of the JLR covenant is under the microscope from property investors at present with one of the UK’s largest ever logistics forward funding opportunities currently in the market.
As revealed by React News last month, £300m of backing is being sought to build out a 2.94m sq ft pre-let by the auto colossus at IM Properties’ Appleby Magna site Leicestershire, which once complete will be used as JLR’s global aftermarket parts distribution facility.
CBRE is advising JLR in Solihull and is mandated to source the funding for Appleby Magna.
