One Piccadilly Gardens in Manchester has been sold by Europa Capital to Legal & General Property’s Managed Property Fund for GBP75 million, reflecting a net initial yield of 5.64 per cent.
Europa Capital acquired the property in September 2011, on behalf of Europa Fund III, in a joint venture with Paul Parkinson.
Comprising a high spec Grade A multi-let office building in the heart of Manchester’s Central Business District, One Piccadilly Gardens was developed by Argent in 2003, providing accommodation over basement, ground and six upper floors. In addition, a self-contained Pavilion building contains two further retail units fronting onto the Gardens.
Currently producing a total annual passing rent of GBP4,328,092, it has a weighted average unexpired lease term of 6.21 years. The fully let office space has a high quality tenant line up and is home to The Bank of New York, JLL, Manchester City Council, Manchester Evening News and Allianz Cornhill Insurance, while the retail line-up at the property includes Pizza Express, Caffé Nero and Pret A Manger.
The Managed Property Fund was launched in June 1971 and is an open-ended fund available to occupational pension schemes. Valued at GBP2,030 million (as at end June 2014), it has outperformed the AREF / IPD UK Quarterly All Balanced Property Funds Index over one, three and five year periods.
Mark Russell, fund manager of the Managed Property Fund, says: "One Piccadilly Gardens complements the existing portfolio as we continue our rotation towards assets capable of delivering growth. As the macro-economy continues to improve, we believe that opportunities to increase rental tone in selective buildings will arise.
“The high profile of the building within central Manchester, the broad and vibrant amenity and excellent transport infrastructure continues to prove attractive to occupiers. Prevailing rents and a development pipeline that is yet to fully respond suggest that the asset is set fair to deliver growth in the short-medium term. Based off affordable rents and offering a number of natural lease events, we will look to undertake asset management initiatives and significantly improve the property’s sustainability credentials.”
Rob Sim, head of Northern Europe at Europa Capital, says: “We are very pleased with the success of our investment in One Piccadilly Gardens, a high profile and well located asset which we acquired three years ago and over which time we have added value through active asset management. This is Europa's seventh realisation in Europa Fund III and brings the total value of assets sold to over EUR2.7 billion. This is ahead of business plan targets and we have further sales in discussion.”