UK REIT RDI has exchanged contracts to sell the City Point office building in Leeds, UK to the West Midlands Pension Fund for £26 mln (€30 mln).
The 5,699 m2 property was originally acquired as part of the company’s AUK portfolio acquisition in March 2016 for £21.6 mln with over 17% vacancy. In January 2017, RDI let 1,022 m2 to Blacks Solicitors, bringing the asset to full occupancy.
The sale price represents a net initial yield of 5.8% and a 15.3% premium to the last reported market value. The geared internal rate of return over the investment period was over 20%.
RDI said in a statement that the disposal is in line with its strategy of recycling capital out of mature assets and into new growth opportunities.
Mike Watters, Chief Executive, commented: 'The disposal of City Point, Leeds represents yet another example of delivering value from the AUK acquisition. After two years of owning this asset, we have delivered an excellent 20.6% premium to the acquisition price, whilst also de-risking the portfolio by reducing our exposure to a maturing regional office investment market and an asset with a number of upcoming lease breaks and expiries.'
The property delivers total gross annualised rental income of £1.6 mln with a weighted average unexpired lease term of 3.7 years.
