Transactional volumes are in the doldrums with just £1.7bn traded in July according to Colliers International. With the industry now in back-to-school mode, the final few months of the year will determine whether the slowdown has been a Brexit blip or if the market is in for a prolonged slowdown. The biggest struggle may be the dearth of stock available, with sellers unwilling to let go of their crown jewels during a time of instability. Here are some of the best opportunities to strike a deal:
Fitzroy Place, W1 – 50% stake
Price: £225m – 4% yield
Owner: Kaupthing
Sector: Office
Size: 240,000 sq ft
Kaupthing’s stake in Fitzroy Place was put up for sale last month and the new headquarters of Estée Lauder is one of the most coveted investment opportunities currently available. Aviva Investors owns the other 50% stake in the building and although its preference is not to sell, rumour is rife that if the right offer was made it would have to be considered.
Victoria Student Halls
Price: £450m
Owner: Blackstone
Sector: Student accommodation
Size: 7,921 beds, 32 assets
Blackstone has this week put up for sale the student accommodation business it bought from the hands of Ireland’s National Asset Management Agency in 2014 when it sold the private equity firm loans taken out by Michael O’Flynn. The portfolio will be an opportunity for investors such as Brookfield, Mapletree, LetterOne to build further scale in the sector.
Winnersh Triangle, Berkshire
Price: £375m – 5.4% yield
Owner: Patrizia & Oaktree Capital Management
Sector: Office
Size: 1.4m sq ft
The market snubbed the sale of Patrizia and Oaktree’s business park near Reading earlier this year when it was put up for sale through JLL. In the run-up to the EU referendum, the market cooled for such major assets outside of London but with there being at least some more clarity, at the right price, a deal would surely be feasible.
Rio portfolio
Price: £200m
Owner: BlackRock
Sector: Mixed
Size: 20 assets
Rio is a rare beast in as far as there is a dearth of portfolios on the market because of particular uncertainty surrounding the pricing of secondary assets. The portfolio, being sold out of BlackRock’s UK Property Fund, which has experienced a spate of redemptions, is made up of office, retail, industrial and car showroom assets that BlackRock considers to be non-strategic.
Cannon Place, EC4
Price: £500m – 4.4% yield
Owner: Hines
Sector: Office
Size: 418,000 sq ft
The owner of the office colossus above Cannon Street station, Hines, has endured a torrid time trying to sell the building alongside agents CBRE and Savills. Taiwanese life insurance company Fubon Life aborted a deal to buy the building in April, having been under offer for around four months after failing to gain regulatory approval. German open-ended fund manager Union is also said to have come close to signing on the dotted line. A deal is there to be done.
7-8 St James’s Square, SW1
Price: £250m – 3.5-4% yield
Owner: Green Property
Sector: Office
Size: 65,534 sq ft
St James’s Square has a salacious history, having been at the heart of a portfolio once owned by fraudster Achilleas Kallakis. Since Green took on the building in 2008 it has become one of the most successful buildings in the West End, achieving rents of £150 per sq ft. Not yet officially being marketed, it is likely to be put up for sale through CBRE although direct approaches have already been made.
Brindleyplace, Birmingham
Price: £300m – 6% yield
Owner: Lone Star/Hines
Sector: Office
Size: 640,000 sq ft
A sale of one of the best-known business campuses in the country collapsed in February when a Middle Eastern buyer withdrew from the process and the Birmingham asset was taken off the market. Home to the regional centres of Deutsche Bank and Royal Bank of Scotland, both sellers would likely be willing to get capital in the door to return to investors given the appropriate offer.
Burlington Arcade, W1
Price: £150m
Owner: Thor Equities/Meyer Bergman
Sector: Retail
Size: 37,020 sq ft
The prestigious shopping stretch in the heart of Mayfair is not officially on the market but investors have long been eyeing the 48-shop scheme given its heritage as Britain’s first shopping arcade. Meyer Bergman’s stake is held in a fund it is soon looking to sell out of. Since being bought in 2010 for £104m Burlington Arcade has undergone a £11.7m revamp.
Ocean Terminal, Edinburgh
Price: £80m – 6.5% yield
Owner: Resolution Property
Sector: Retail
Size: 420,000 sq ft
Ocean Terminal was being prepped for sale through CBRE in April but the onset of Brexit wobbles and the downfall of BHS, one of its major tenants, meant that the process never really started in earnest. With there now being some more clarity in the market it could be one of a small number of shopping centre investment opportunities around.
Nine Elms Square, SW8
Price: Circa £576m
Owner: St Modwen/Vinci
Sector: Residential
Size: 10.2-acre site
The prized riverfront site at New Covent Garden Market will be a telling process for the under pressure Vauxhall residential market. Despite perceived oversupply, the site is arguably the best in the area with consent for 1,821 flats. Up for sale through JLL, a deal could be struck before year end.
20 Fenchurch Street, EC3 – 11.7% stake
Price: £150m – 3.1% yield
Owner: MSRE1]
Sector: Office
Size: 670,000 sq ft
Morgan Stanley began testing the market in April over a sale of its stake in one of Europe’s best-known buildings but no sale has been agreed yet. The 37-storey skyscraper is almost fully let and generates a steady income of £40m but the minority stake provides little strategic control over the building.
Amazon distribution centre, iPort, Doncaster
Price: £105m – 4.75% yield
Owner: Verdion
Sector: Logistics
Size: 1.1m sq ft
In May, Amazon agreed to lease a major distribution centre at Verdion’s iPort on a 15-year deal at £4.50 per sq ft. Not formally for sale, it is likely to attract offers that will be difficult to refuse.
10 Canons Way, Harbourside, Bristol
Price: £92m – 5.1% yield
Owner: Topland
Sector: Office
Size: 176,611 sq ft
This asset is one of the largest offices in Bristol, and is leased to Scottish Widows for a further 16.75 years at a passing rent of £4,460,011 pa, £25.67 per sq ft. Office supply in the city has been constrained with the market being notably affected by the implementation of PDR and change of use for student accommodation, reducing stock by an estimated 900,000 sq ft.
The Range, Avonmouth, Bristol
Price: £90m – 5% yield
Owner: The Range and Stoford
Sector: Logistics
Size: 1.58m sq ft
Stoford started work on retailer The Range’s distribution facility earlier this year. The mega-shed is located on 55-acres and will be one of the UK’s largest logistics hubs. It will also be one of the most high-tech warehouses in the country. Market rumours indicate the site is due to be launchedn late September.
