Schroders acquires university campus in London for €86m

Schroder Real Estate Investment Management has acquired The University of Law campus in Bloomsbury, Central London, for £68 mln (€85.6 mln).

The price reflects a net initial yield of 4%.

The property will be allocated on a 50-50 basis to Schroder Real Estate Investment Trust and Schroder UK Property Fund, both managed by Schroders.

The freehold asset has been acquired from The University of Law which has entered into a new 12-year lease without tenant breaks at a rent of £2.9 mln per annum.

The campus consists of two parcels of land with four buildings totalling around 7,800 m2 and providing a mix of office and educational space. The property is located approximately 400 metres north of Tottenham Court Road station and one block away from Bedford Square.

The acquisition is Schroders’ ninth since rolling out its growth strategy in December 2013. Over this period, the company has invested £120 mln at an average initial income return of 6.6% with an average unexpired lease term.

The campus deal follows the placement of 47 million shares at an issue price of 57.5 pence per share, generating proceeds of £27 mln. The placement was carried out a premium to the last reported net asset value.

Commenting on the placement, Duncan Owen, head of real estate at Schroders, said: ‘It is the third time this year that placing proceeds have been efficiently deployed in line with the company’s strategy of targeting investments with strong fundamentals in a good location. The acquisition of four buildings on two freehold parcels of land presents both a future opportunity to intensify and change use whilst also benefiting from an inflation linked rental stream.’