Independent UK real estate investment manager Lothbury has disposed of its retail and office holding at 78-90 Buchanan Street and 9-17 Exchange Place, Glasgow to Pontegadea, the real estate investment vehicle of Zara billionaire owner Amancio Ortega.
The transaction amounts to £31 mln (€35 mln), reflecting an initial yield of 3.99%.
The 35,000 sq ft (3,250 m2) property previously held by the Lothbury Property Trust comprises retail, leisure and offices and produces annual rental income of £1.3 mln.
Buchanan Street, known as Glasgow’s ‘Style Mile’, is home to a number of international retailers and is the second busiest retailing street in the UK, after London’s Oxford Street.
At the end of last year, Lothbury agreed an extension of Vodafone’s lease on their prominent corner unit by a further 10 years from December 2019 at £320 per sq ft ITZA, a 23% uplift and a new record rental for Buchanan Street.
Asset management initiatives
Mike Toft, senior fund manager and executive director of Lothbury Investment Management, said: 'Buchanan Street has been one of Lothbury Property Trust’s top performing assets since we purchased it in 2013, as a result of repositioning the property after a number of asset management initiatives.'
The building was purchased out of administration for £17.42 mln. It is currently fully occupied and let to Vodafone, Lush and Starbucks on the ground floor. The above office space is occupied by Building Design Partnerships, BNP Paribas Real Estate and Drum Property Group on. The weighted average lease term is 8.8 years.
'Rental growth has remained good despite the downturn in retail. However, with the challenges now facing the retail sector, this was a good opportunity to sell and reinvest in other areas, particularly the industrial and alternative sectors,' added Toft.
The disposal is in line with Lothbury's strategy of selectively reducing its exposure to high street retail.
CBRE acted for Lothbury; Sheridan Property Consultants acted for Pontegadea.
