AEW UK REIT (AEWU) has divested an office asset in Glasgow, UK, to a subsidiary of IQ Student Accommodation, for £9.3 mln (€11 mln).
The property, as 225 Bath Street, has been earmarked for demolition and a change of use at the site. Planning consent has already been secured by IQ to develop a 527-unit purpose-built student accommodation (PBSA) asset on the plot.
Laura Elkin, portfolio manager, AEWU, commented: 'As the culmination of a long running business plan, we are delighted to see this sale complete.
'The disposal not only maximises the value of the asset but will increase occupancy levels across the remaining portfolio, reduce running costs and boost earnings, once capital is reinvested.
'The proceeds from the sale are already under offer to assets in exclusivity and, as such, we expect to make further purchase announcements in the coming weeks.'
The sale agreement required AEWU to negotiate with tenants to bring the asset to vacancy and, as a result, following its sale the occupancy rate for AEWU's remaining portfolio will increase to 91.60% from 86.97% as at 30 June 2022.
Reinvestment of the sale proceeds into pipeline assets under exclusivity is expected to provide a significant boost to the company’s earnings, AEWU said, due to both higher levels of anticipated income receipts and lower running costs.
