Orchard Street acquires office in Newcastle at 6% yield

London-based investment manager Orchard Street has acquired an office building in the northeastern English city of Newcastle for £40 mln (€53 mln).

The price reflects a net initial yield of 6%.

Orchard Street acquired the Wellbar Central office scheme in the city centre of Newcastle from client of BNP Paribas Real Estate. Built in 2010, the Grade-A office comprises almost 117,700 sq ft (11,000 m2) over 10 storeys, and is let to tenants including Sky UK, Global Radio, Irwin Mitchell and DAC Beachcroft. Sky UK provides 40% of the rental income.

Rents in the building range from £19 to £21.50 per sq ft, and offer good prospects for growth given the dearth of modern office stock available in Newcastle city centre, according to BNP Paribas Real Estate.

Aidan Baker, director in BNP Paribas Real Estate’s Newcastle office, added: 'Grade-A office supply in Newcastle has diminished significantly over the past five years to just over 100,000 sq ft. Coupled with the limited development pipeline, this should have a further positive impact on headline rents.'

Cushman and Wakefield acted for Orchard Street. BNP Paribas Real Estate acted for the vendor.