Bruntwood asks £57.5m for Plaza
The Oglesby family’s property company has instructed agent CBRE to bring to market the 370,000 sq ft Plaza office building in Old Hall Street, Liverpool, at an asking price of £57.5m, which would reflect a net initial yield of 8.25%.
Bruntwood acquired the 14-storey former Littlewoods headquarters for £24.5m in 2003 and has since comprehensively refurbished and extended the building, creating a new entrance onto St Paul’s Square.
The Plaza is 90% let, to 31 tenants producing a combined annual rental income of £5m. The average unexpired lease length is 5.7 years. The eight largest tenants produce 75% of the rental income and include law firm Weightmans, US Airways, Investec Wealth, the Co-operative Bank and shipping line Maersk Group.
The marketing brochure issued by CBRE says the quoting rent is £16/sq ft and there is potential to add value through letting of 14,000 sq ft ready for immediate occupation on the third floor. The third floor could also be extended from 14,000 sq ft to 40,000 sq ft by extending over the second floor podium.
CBRE said in its marketing brochure: “There are numerous instances of tenants within the building currently wishing to expand which presents a future owner with an opportunity to relocate tenants into available space and re-gear/extend existing leases.”
The asset includes four retail units, with one vacancy. Two units are let to WH Smith and one to Saladbox. There are also 137 car parking spaces.
One investment agent, who asked not to be named, said: “It’s a further indication of Bruntwood’s eagerness to trade mature assets, to recycle proceeds back into its development programme. The sale will be watched closely by the market as a bellwether of how strong the market is in Liverpool. It’s a very good quality building at an attractive yield, but it is a large lot size for Liverpool. It will be a sign of the market whether someone will put that money into Liverpool.”
The agent said likely buyers would be US venture funds attracted by the yield, at a 1% discount or better compared to Manchester, and the good income. UK institutions, he added, would be less willing to commit £50m to Liverpool, worried partly by who they would sell to once they have added value and pushed the price up in the coming years.
Last year, 101 Old Hall Street, over the road from the Plaza and let to the UK Border Agency which processes passports, was marketed for sale by owner Henderson and was believed to be under offer to Deutsche Bank but the sale fell through. Henderson is rumoured to be considering bringing the asset back to market in 2016. The asking price was around £30m.
The Plaza is Bruntwood’s largest office asset in Liverpool. The company recently converted part of Queens Insurance Buildings into a hotel fronting Castle Street and announced plans to convert Orleans House, off Old Hall Street, into apartments.
No one at Bruntwood was available for comment.