Aberdeen Standard Investments AIPUT fund (Airport Industrial Property Unit Trust) has successfully bucked the wider commercial real estate market this summer, achieving full occupancy across its London-focused airport industrial real estate portfolio following the completion of several key lease agreements at Heathrow Airport.
The Heathrow South Cargo Centre warehouse at Heathrow Airport.
Courtesy Aberdeen Standard Investments
AIPUT is one of the largest private landlords at Heathrow, with a portfolio of some 2.1m sq ft. The fund, which marked its 15-year anniversary in March 2020, has been responsible for almost 30% of new letting deals at Heathrow Airport so far in 2020, amounting to almost 200,000 sq ft with a further 130,000 sq ft lease extension agreed with Kuehne+Nagel - the world’s second largest airfreight forwarder - at its South Cargo Center location. This key airfreight facility plays a vital role – highlighted by the Covid-19 pandemic – in supporting national resilience through the large-scale importation and exportation of pharmaceuticals and medical equipment.
AIPUT’s focus in 2020 has been both to enhance its relationship with existing customers and to welcome new customers to the fund, building in resilience to protect against future headwinds. The fund has recently agreed an extension to its £200million revolving credit facility with RBSI (Royal Bank of Scotland International) through to late 2022.
The most recent transactions bringing the portfolio to full occupancy were lease agreements with Automania Garage Services (AGS) and PRS Distribution at Airport Gate, together representing almost 100,000 sq ft of industrial warehousing. AGS is a new customer for AIPUT, whereas PRS has a long-standing relationship with the fund, having previously occupied space at its Blackthorne Point location.
Nick Smith, fund manager of AIPUT, said: “Achieving full occupancy in the context of Covid-19 demonstrates the unquestionable need for and resilience of AIPUT’s airport-focused real estate portfolio in even the most testing economic environment. The portfolio is as market resilient as it has ever been, due to our determination to be responsive to the evolving needs of our customers.
“We will continue to manage the AIPUT portfolio to prioritise maximum occupancy and a durable income stream; working to successfully navigate our way through this extremely challenging period for commercial property, whilst also working with our clients to identify future growth opportunities.
“Whereas the Heathrow industrial property market is currently working effectively, we expect that a resurging consumer demand and national need will put further pressure on a distinctly limited availability of new warehouse space.”
In preparation for the handover to AGS, Units 2-4 at Airport Gate were extensively refurbished during the lockdown period, ensuring that the buildings would be completed in time to meet the company’s required timescale for occupation.
Prior to the most recent Airport Gate lettings, AIPUT also completed a 28,000 sq ft long-term lease in May 2020 with Rygor Commercials at its Camgate location, also at Heathrow. Back to back transactions in Q1 at Central Park Estate with Hertz and Expressway Handling set the tone for AIPUT’s busy year of leasing activity.
Earlier in 2020, AIPUT secured planning permission for two new warehouse buildings at its dnata City East site in Stanwell (115,000 sq ft) and the Blackthorne Point estate at Poyle (Slough) of 28,000 sq ft. The former has been pre-let to dnata and will operate in conjunction with the existing state-of-the -art 242,000 sq ft warehouse that began operations with dnata (and its customers, Virgin Atlantic Cargo and Delta Cargo) in September 2019. The two buildings at dnata City East will process around 10% of Heathrow’s total airfreight capacity.