Schroder Real Estate Investment Trust (SREIT) has agreed to sell a one acre plot, comprising part of its Wembley site, for GBP7.4m to a wholly owned subsidiary of The UNITE Group.
Completion of the sale is subject to planning.
The Wembley site adjoins the 74,000 sq ft Olympic Office Centre and the plot being sold is currently used as a car park servicing the office. The disposal is part of a comprehensive redevelopment strategy for the company’s investment, which is adjacent to Wembley Stadium. SREIT identified that the site had potential for adding value with alternative high value uses as well as significant frontage onto Olympic Way. It is expected to benefit from the regeneration that is being undertaken across the Wembley area and the company has therefore pursued an asset management plan which fully capitalises on the asset’s strategic location.
Following the sale, SREIT will still own the Olympic Office Centre and a remaining one acre plot. The combined valuation of the Olympic Office Centre together with the two plots is GBP16.5m as at 30 June 2013. The value of the plot being sold is included within the valuation of the Olympic Office Centre of GBP12.5m whereas the remaining plot is valued separately at GBP4m.
In June 2013, SREIT submitted an outline planning application for a 400,000 sq ft mixed use scheme on the undeveloped land at the site to provide for a range of uses including student accommodation, residential, offices, hotel, leisure and retail. In addition, as the plot being sold currently provides car parking for the Olympic Office Centre, a detailed application has also been made for a new multi-storey car park at the base of the Olympic Office Centre, to service its future parking requirements. It is anticipated that the two planning applications will be determined before the end of 2013 and the Local Authority has indicated that it is supportive.
Subject to receiving consent for both planning applications, UNITE will make a detailed planning application for the site it is conditionally acquiring for 200,000 sq ft of student accommodation comprising approximately 684 rooms and ancillary retail. The price payable by UNITE is adjusted for each room secured above or below 684, subject to a minimum purchase price of GBP6.76m. If UNITE were to receive planning approval for rooms below this number, it can choose not proceed with the transaction. UNITE expects to make a detailed application by the end of 2013.
Alongside the disposal of the one acre plot, the company will continue to explore options to maximise value from the redevelopment of the retained plot of land. The outline planning application would potentially accommodate a 200,000 sq ft residential scheme with retail and other uses at ground floor level.
Assuming the planning consents are successfully achieved, the disposal to UNITE and the redevelopment strategy have the potential to make a significant contribution to SREIT’s net asset value. Furthermore, the fact that the plots are substantially non-income producing means that sale proceeds could be redeployed by the company into higher yielding investments to increase net income.