Three vehicles managed by Schroder Property Investment Management have worked together to acquire the highest skyscraper in Manchester.
Three vehicles managed by Schroder Property Investment Management have worked together to acquire the highest skyscraper in Manchester.
Schroder Real Estate Investment Trust is taking a 25% stake in City Tower, with the rest going to Schroder UK Property Fund and Immobilien Europa Direkt, both managed by Schroder PIM.
The total investment volume comes to £132 mln (€161 mln) and reflects a headline net initial yield of 7%. The vendor was family owner property company Bruntwood. Colliers International advised Schroders.
City Tower is a 30-storey, multi-let property located at Piccadilly Gardens in Central Manchester. It provides 57,175 m2 of office, retail, leisure and hotel accommodation on a 1.2-hectare island site. There are also 456 car parking spaces.
Schroder REIT also announced the completion of a £40 mln share offer, part of which will be used to fund the acquisition. Completion is subject to freeholder and other consents, expected within four to six weeks.
The acquisition offers an initial rent of £2.4 mln per annum on expiry of rent free periods and after non-recoverable property expenses. The offices are let at a low initial rent of £17 per sq ft with key tenants including the National Institute for Health and Care Excellence (NICE), the Ministry of Justice, The University of Law Limited and Aegis Outsourcing (UK).
Schroder REIT said the co-ownership structure enables it to invest in a property it would otherwise not be able to access, and that there is potential to add significant value through asset management.
Duncan Owen, head of property at Schroder Property Investment Management said: 'This transaction demonstrates the effectiveness of our recent share placing, enabling us to quickly deploy capital into an accretive acquisition, whilst minimising cash drag.'