Rockspring fund acquires Edinburgh office building at 6.5%

Rockspring Property Investment Managers has acquired an office building in the Scottish capital of Edinburgh. The investment volume of £56 mln (€78 mln) reflects a net initial yield of 6.5%.

Rockspring carried out the transaction on behalf of its UK Value 2 fund. It marks the eighth property to be purchased for the fund and brings the total aggregate value of assets held by UK Value 2 to £260 mln.

The latest acquisition is the 1 Tanfield office building in Edinburgh, acquired from the Carlyle Group.

The building was recently redeveloped and comprises 17,700 m2 of grade A office space over three floors and an underground car park with 297 spaces. Currently 80% let to mainly IT-related businesses, the property's tenants include Dell, Trainline.com, Aecom and FNZ, a provider of integrated wealth management platforms, with a WAULT of 9.7 years. Three office suites totalling 3,500 m2 are currently vacant.

Richard Bains, Rockspring partner and fund manager of the UK Value series, said: 'Tanfield provides us a robust cash flow with the opportunity to add value through lease up of the existing space and facilitating tenant expansion within the building. Alongside the other office properties already in the portfolio – Peter House in Manchester and Guildhall in Glasgow – this acquisition broadens the fund’s exposure to the strong UK regional office market which we believe offers compelling market dynamics and rental growth potential.'

Rockspring recently announced the final close of UK Value 2 which, at eight months, was the fastest fundraise Rockspring has achieved in its 30-year history. Rockspring secured a total of £342 mln of equity from 11 investors for the fund, which will have a duration of seven years. The fund, which pursues a core-plus strategy, will be 50% geared to provide total firepower of £650 mln.

Eric Young & Co acted for Rockspring, while the vendor, Carlyle Group, was advised by CBRE.