Legal & General Property has acquired an office building in Manchester from Europa Capital for £75 mln (€94 mln), reflecting a net initial yield of 5.64%.

Legal & General Property has acquired an office building in Manchester from Europa Capital for £75 mln (€94 mln), reflecting a net initial yield of 5.64%.

The purchase price represents an 11.9% premium to the amount Europa Capital paid for the asset in 2011, when it acquired it from a private Irish investor for £67 mln in a joint venture with Paul Parkinson.

One Piccadilly Gardens is a six-storey building located in the heart of Manchester’s Central Business District. It is fully let with tenants including The Bank of New York, JLL, Manchester City Council, Manchester Evening News and Allianz Cornhill Insurance. The average unexpired lease term is 6.21 years. A self-contained pavilion building containing two further retail units is let to Pizza Express, Caffé Nero and Pret A Manger.

LGP purchased the asset for its Managed Property Fund, an open-ended fund launched in June 1971 which is available to occupational pension schemes. Valued at over £2 bn (at end- June 2014), it has outperformed the AREF / IPD UK Quarterly All Balanced Property Funds Index over one-, three- and five-year periods.

Mark Russell, fund manager of the Managed Property Fund, commented: ‘The high profile of the building within central Manchester, the broad and vibrant amenity and excellent transport infrastructure continues to prove attractive to occupiers. Prevailing rents and a development pipeline that is yet to fully respond suggest that the asset is set fair to deliver growth in the short-medium term. Based off affordable rents and offering a number of natural lease events, we will look to undertake asset management initiatives and significantly improve the property’s sustainability credentials.'

For Europa Capital, the sale represents the seventh disposal by its Europa Fund III and brings the total value of assets sold to over €2.7 bn. ‘This is ahead of business plan targets and we have further sales in discussion,’ said Rob Sim, head of Northern Europe.

Savills acted for LGP and Europa Capital was unrepresented.