Rockspring Property Investment Managers, on behalf of Rockspring UK Value Fund, has sold Gateway House in Richmond, London, for GBP44.1m, reflecting a net initial yield of 5.0 per cent pa, to a client of Cushman & Wakefield.
Gateway House comprises 62,000 sq ft of office space, fully let to Reed Exhibitions, seven retail units and a multi storey car park.
Since acquiring the property in 2011, Rockspring has added value through a number of asset management activities, including: completing a letting to Sainsbury’s Local on a new 20 year lease; re-gearing the lease with office tenant Reed Exhibitions on improved terms and for additional space; settling a rent review for the car park at a 70 per cent uplift over passing rent; and acquiring the head leasehold interest, thereby increasing the tenure from 82 to 982 years.
Gateway House is the final asset to be sold from the St. Martin’s South East office portfolio, which comprised five office properties acquired by the fund in February 2011 for GBP47.78m. Following the acquisition, Rockspring implemented a number of asset management initiatives at the properties and has now sold all of them, achieving a portfolio level IRR in excess of 20 per cent pa.
The other properties in the portfolio were:
▪ Oriel House, The Quadrant, Richmond – a 24,000 sq ft office space and retail property sold in September 2013 to an institutional client of Aviva Investors for GBP9m, reflecting a net initial yield of 6.85 per cent
▪ Kings House & Conquest House, Wood Street, Fife Road, Kingston-Upon-Thames – 102,000 sq ft property comprising two office buildings, with ancillary ground floor retail units, sold in May 2013 to an institutional client of Aberdeen Asset Management for GBP31.05m, reflecting a net initial yield of 6.85 per cent
▪ Hays House Guildford – an 18,000 sq ft multi-let office building, sold in February 2013 to clients of Cornerstone Real Estate Advisers for circa GBP4.5m, reflecting a net initial yield of 7.15 per cent
▪ Overline House, Crawley – 47,000 sq ft office building, sold to The Arora Group in July 2010 for GBP1.4m
Richard Bains, Rockspring UK Value Fund manager, says: “This investment exemplifies the type of deal that the UK Value Fund programme targets, allowing us to leverage Rockspring’s asset management expertise to create value at properties that have been under-managed, and successfully complete sales to generate strong returns on behalf of our investors.
“We continue to see opportunities in the market where our unique skill-set and experience of the UK real estate sector will allow us to generate income and value growth, and aim to take advantage of these for investors in our next vehicle, UK Value Fund 2, for which we are currently fundraising.”
Chris Lewis, head of national office investment at Cushman & Wakefield, advising the purchaser, says: “This represented an excellent opportunity for our client, matching their requirements for long term reversionary income diversified across a range of strong covenants including the government for over 56 years. It further appealed as it occupies a strategic site adjacent to the mainline rail and underground stations in an affluent Greater London suburb.”