Brockton Capital has put the UK’s largest mixed-use building outside London up for sale.
The investor and its joint venture partner Milligan have appointed CBRE to market The Mailbox in Birmingham for £235m.
The asking price for the 690,000 sq ft scheme reflects a yield of 5.25% and a capital value of £340 per sq ft.
The sale is the latest boon for the UK regional investment market, which has secured 51.6% of total UK investment since the EU referendum as investors search for value away from the capital.
The Mailbox is one of Brockton’s longest-held assets, having bought it in 2011 for £127.1m from Alan Chatham and Mark Billingham’s Birmingham Development Company at the market’s nadir. It is currently held in the Brockton Capital Fund II LP, the £500m fund that closed in 2010.
Since the acquisition Brockton has undertaken a major Stanton Williams-designed repositioning and refurbishment of the asset. It is currently 95% let, with an average unexpired lease term of more than 15 years and has a rent roll of more than £13m.
Take a look at the Mailbox’s refurbishment
The building, located near Birmingham’s New Street Station, is best-known for its leisure offering, including bars and an Everyman cinema, as well as upmarket retailers.
Brockton secured Harvey Nichols as its 45,000 sq ft anchor tenant in 2013, and it is also home to retailers such as Hugo Boss, Emporio Armani, Paul Smith, made.com and Heal’s.
However, 40% of the building’s income is from office tenants including the BBC, Advanced Computer Software Group, Associated Architects and engineering firm WSP, which leased 47,000 sq ft in January. It also has a 687-space car-park, which is one of the city’s busiest.
The 200 flats, which were sold off individually following the building’s completion in 2000, and the long-leasehold of the 193-bed Malmaison hotel owned by Legal & General, which are integrated within the building, are not included in the sale.
Positive momentum
Brockton is looking to take advantage of the positive momentum in Birmingham’s property market following a record year for office take-up in 2017, which broke the 1m sq ft barrier.
Under the leadership of mayor and former John Lewis boss Andy Street and West Midlands Combined Authority chief executive Deborah Cadman, the city has secured a place on the shortlist for the relocation of Channel 4, is preparing to host the Commonwealth Games in 2022 and will benefit from faster journey times to London upon completion of the HS2 rail link in 2026.
The Mailbox also neighbours Miller Developments’ Arena Central, which will be home to HSBC’s new 210,000 sq ft officeHMRC’s 239,000 sq ft hub within the next three years.
Brockton started a corporate metamorphosis in February as it repositions from a fund manager to a more traditional property company.
Its new company, Brockton Everlast, has raised an initial £340m of equity from Tel Aviv-listed Alony Hetz Properties and Investments to build a portfolio of “forever assets” in Greater London, and Brockton is moving away from its traditional higher risk, opportunistic style of investing and more towards core-plus strategies.
However, the company continues to manage and invest its existing three funds such as the one that contains The Mailbox, the most recent of which raised £860m of equity in 2016.
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