CASE STUDIES

RECENT WORK

We achieve excellent results by micro managing every aspect of an investment from acquisition,
through asset management and ultimately, the sales process. Here are some
recent examples of the work we do.

AZTEC WEST
BRISTOL

DATE ACQUIRED: JANUARY 2016
ACQUISITION PRICE: £6M

SYNOPSIS

The property was a former single let HQ building located on Aztec West, Bristol’s premier business park. It was acquired as part of the Rainbow Portfolio.

SUMMARY BUSINESS PLAN

Appraisal - Following a carefully considered review of the Bristol Office Market the decision was taken to speculatively refurbish the property.

ACTIONS

  • Major Pre-let secured – First Floor (31,549 sq.ft.) pre-let to Edvance (EDF) on ten-year lease from August 2018 at a gross rental income of £21.50 psf
  • Successful Refurbishment - Major “back to shall” refurbishment of the whole building completed August 2018, into active Bristol Market with limited supply. Project completed within the agreed £7m budget
  • Major letting - Ground floor (32,007 sq. ft. ) let to Secretary of State for Defence on a ten-year - lease from December at a gross rental of £20.00 psf
  • Final Major Letting – Second Floor (9,736 sq.ft.) let to Edvance (EDF) on nine-year lease from August 2019 at a gross rental income of £23.00 psf

RESULT

Property 100% Let within 13 months of practical completion at ahead of forecasted ERV

  • Market Value (£m): £18.4m
  • Sector: Office
  • Annualised gross rent (£m): £1,542,371
  • Lettable Area (sq.ft.): 73,292
  • Anchor tenants: Edvance (EDF), Secretary of State for Defence
  • Let by area: 100%

COMMENT

“This was an exciting acquisition for Regional REIT, highlighting the groups focus on buying well-located office opportunities in established locations and it’s skill in delivering on asset management plans. Prime refurbishment opportunities in the South West are in short supply and yet we were able to acquire and reposition the asset to meet market demand at less than the cost of replacement, with the asset fully let with within 13 months of completion of the refurbishment.”

2800 THE CRESCENT
BIRMINGHAM BUSINESS PARK

DATE ACQUIRED: AUGUST 2014
ACQUISITION PRICE: £2.9M

SYNOPSIS

The property was a former single let HQ building located on Birmingham Business Park acquired as part of the Empire Portfolio.

SUMMARY BUSINESS PLAN

Appraisal - Following Severn Trent Water’s lease expiring in March 2016, the building was refurbished reflecting the demands of the Birmingham out of town Office Market.

ACTIONS

  • Substantial refurbishment undertaken including remodelled reception, lift lobbies, enlarged WC cores, new entrance and M & E replacement all to Grade A spec.
  • Building positively launched to the market in March 2018
  • December 2018: Entire ground floor, 13,356 sq ft, let to Align Technology UK Ltd on a ten year lease at £22 per sq ft.
  • August 2019: First Floor part, 6,750 sq ft, let to VWS (UK) Ltd on a 10 year lease at £22 per sq ft.
  • Remaining Space: strong demand for remainder of space (c. 8,350 sq ft)

RESULT

Property 70.5% Let within 18 months of practical completion at rents ahead of forecasted ERV

  • Acquisition Price: £2.9m
  • Capital Expenditure: £2.4m
  • Valuation Jun 2019: £6.9m
  • Sector: Office
  • Contracted rent £442,332
  • Lettable Area (sq.ft.): 28,583 with 140 parking spaces
  • Anchor tenants: Align Technology, VWS (UK) Ltd
  • Let by area: 70.5%

BENNETT HOUSE
HANLEY

DATE ACQUIRED: DECEMBER 2013
ACQUISITION PRICE: £4.4m

SYNOPSIS

Single let HQ building located in Hanley, Staffordshire. The tenant, HM Court and Tribunal Service had used the property as an Immigration Court. As a result of Government Policy to centralise services in Birmingham, the property was deemed surplus to requirements.

SUMMARY BUSINESS PLAN

Following engagement with the Tenant, while there was no prospect of retaining the Court operation, it materialised that the Government had a potential requirement for the local area for a smaller administration centre to support HM Court and Tribunal Services thus while the previous lease had expired, the Tenant continued to ‘hold over’ and pay rent while discussions were ongoing.

ACTION TO DATE

Following ongoing engagement with the Tenant, a proposal was tabled appraising the options of how the property could become multi-let, to allow the Tenant to enter into a new lease of over 70% of the building with the dilapidations claim being reinvested in the property.

  • Major letting secured – Ground and 1st floor ( 32,178 sq ft)  Secretary of State for Communities & Local Government (for HM Court Services) on a ten year lease from June 2019 at a gross rental of £9.00psf
  • Major letting  - Part 2nd floor  (6,494 sq. ft. ) let to Secretary of State for Communities & Local Government (for Valuation Office Agency) on a ten-year -lease from December at a gross rental of £10.00 psf
  • Successful refurbishment of the common parts and the remaining vacant section of the 2nd floor (7,511 sq ft) completed June 2019

RESULT

Retained Government income on whole building while improving the asset through refurbishment.

  • Market Value (£m): £5.1m (June 19)
  • Sector: Office
  • Annualised gross rent (£m): £359,047
  • Lettable Area (sq.ft.): 46,183
  • Anchor tenants: Secretary of State for Communities & Local Government
  • Let by area: 84%

COMMENT

“This demonstrates the Asset Manager’s skill in working with existing occupiers in adapting and creating space that meets their key requirements, in order to maintain high levels of occupancy across the portfolio”

MILBURN HOUSE, DEAN STREET
NEWCASTLE UPON TYNE

DATE ACQUIRED: JUNE 2013
ACQUISITION PRICE: £6.38M

SYNOPSIS

Package of four period buildings in Newcastle city centre.

SUMMARY BUSINESS PLAN

To dispose of Cathedral Buildings and 17-21 Dean Street, relocate occupying commercial tenant from first floor of St Nicholas Chambers to vacant ground floor space to facilitate conversion of upper floors to residential, complete sales of residential apartments and then dispose of remaining ground floor commercial thereby focussing on Milburn House as a longer term hold and invest in the common areas/upgrading and repair of building to grow rental income.

ACTION TO DATE

Milburn House - 106,900 sq. ft. net lettable office/leisure
Gross income on acquisition - £665,350 Net income on acquisition - £496,405
Current Gross income - £707,000 Current Net income - £536,500
Business lounge hub area created in low value space to encourage lettings - £100k. Further sum of £50k to be invested in upgrading main entrance corridors.

Cathedral Buildings - 24,454 sq. ft. net lettable office/leisure/retail Sold - £1.47M January 2014

17 - 21 Dean Street - 5,658 sq. ft. residential/retail Series of sales ending December 2014 - combined value - £947,450

St Nicholas Chambers - 15,377 sq. ft. office/retail/leisure Gross income on acquisition - £144,887 Net income on acquisition - £77,315 Current Gross income - £138,000 Current Net income - £121,200

Sole occupying tenant on first floor relocated to vacant ground floor suite on new lease leaving all upper floors clear for residential conversion. Planning permission secured for 16 residential apartments. Construction commenced April and scheduled for completion [ ]. 12 apartments currently reserved off plan at combined sales value of £1,235,050. Estimated total sales value £1,741,950.

9 PORTLAND STREET
MANCHESTER

9 PORTLAND STREET

DATE ACQUIRED: DECEMBER 2013
ACQUISITION PRICE: £3.705M

SYNOPSIS

Ground and six upper floor modern offices behind listed retained stone façade extending to 54,941 sq. ft. acquired from receivership. Building entirely vacant due to structural issue with main core staircase necessitating complete replacement of staircase together with other principally M & E issues as a result of shortcomings by developer on refurbishment scheme.

SUMMARY BUSINESS PLAN

Undertake required works package and market space aggressively in terms of competitive rental structure due to low capital value entry price.

ACTION TO DATE

Works package of £1.061M completed October 2014.

6th floor (4,377 sq. ft.) let to SF Recruitment Limited @ £13.50 for 5 years subject to tenant break at Yr. 3 wef November 2014. Ground, 1st & part 2nd, 3rd and part 4th floor in legal hands @ £13.50 per sq ft. Fifth floor in legals at £15 per sq. ft. Current income £744,584 per annum on assumption lettings in hand complete. Balance of 8,112 sq. ft. therefore remains available for let @ £15/sq. ft. Fully occupied income will be £866,264 per annum.

NEWSTEAD COURT, ANNESLEY
NOTTINGHAMSHIRE

NEWSTEAD COURT

CGU HOUSE
LEEDS

CGU HOUSE

CENTURY WAY
LEEDS

CENTURY WAY

CHANCELLOR COURT
LEEDS

CHANCELLOR COURT

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