Mayfair Capital Investment Management has acquired two assets for a total of £72.6m for a new Swiss Life Asset Managers real estate fund.
In Leeds, it has purchased the freehold of 6 Queen Street, a 70,940 sq ft office building which completed in 2016 for £37.2m, reflecting a net initial yield of 5.4%.
The second to fifth floors of the property are let to Burberry until 2027. The ground and first floors are vacant but subject to a rent guarantee.
Phil Sturdy, investment director at Mayfair Capital, said: “This asset matches our client’s income requirement and reflects our investment strategy of investing in high-quality buildings, on long leases, let to strong covenants to deliver attractive, low-risk income returns for our investors.
“Leeds had a record-breaking year in 2017 with city centre office take-up exceeding 1m sq ft, the highest recorded. Accordingly, we believe that the quality of 6 Queen Street, combined with the level of occupier demand in Leeds, gives scope for future enhancement of the asset.”
For the same fund, Mayfair Capital has also purchased the British Gas building at Plot 2600 on Oxford Business Park for £35.4m, reflecting a net initial yield of 4.9%. The self-contained office building is let to GB Gas Holdings until 2029.
Sturdy added: “With just under 500,000 sq ft of office take-up during 2017, Oxfordshire has also had a record-breaking year. Science and technology firms continue to locate in and around Oxford to capitalise on the skilled workforce that Oxford University produces.
“This is a substantial, well-let, reversionary office investment which, like the Leeds purchase, was bought off-market.”
Swiss Life Asset Managers launched its new real estate fund in November last year and raised €300m with its first issue.
Mario Holenstein, portfolio manager at Swiss Life Asset Managers, Real Estate Switzerland, said: “The new fund will invest in core and core-plus properties in large European cities, regional centres and their agglomerations.
“The focus of the investments will be on the European core markets of Germany, France, Austria, Benelux, the UK, Scandinavia and southern Europe.”
Mayfair Capital will act as asset managers for the fund’s UK investments.
Mayfair Capital chief executive James Thornton added: “We are pleased to have acted for the Swiss Life fund in making its first purchases in the UK, the first since Mayfair Capital became part of Swiss Life in November 2016.
“The UK remains an attractive market for overseas investors and the yields available are higher than those available in Switzerland and mainland Europe. Importantly, the blended net income return on the two assets, at 5.16%, is also in excess of the target income yield for the fund.”
JLL advised Mayfair Capital and Knight Frank advised Rockspring Property Investment Managers LLP on 6 Queen Street; ACRE Capital advised Mayfair Capital on Oxford Business Park.
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