Exchange Flags sells for £68m

In one of the largest transactions in Liverpool in recent years, the 360,000 sq ft grade two-listed building has been sold by Shelborn Asset Management to Ashtrom Properties for £68m.

The building has been sold two years after it was purchased by Shelborn for £42m from Hudson. It was previously under offer by a Hong Kong investor earlier this year at a guide price of £70m, but Ashtrom has now snapped up the building for £68m reflecting a net initial yield of 7.67%.

Comprising Horton House and Walker House and positioned directly behind the town hall, Exchange Flags includes 313,000 sq ft of offices over 10 floors, along with 28,000 sq ft of retail, along with an 18,000 sq ft museum.

Office tenants include law firms Brabners and DLA Piper; Regus; the Secretary of State for Defence; Jackson Carter; Brookes Bell; Colliers International; and Deloitte. Colliers signed up for 1,260 sq ft in 2017 but is rent-free until September this year.

The Secretary of State for Defence is the largest tenant with 68,000 sq ft over three floors at a rent of around £16/sq ft. Its lease is due to expire in November 2023. Brabners is the largest occupier in Horton House with 44,000 sq ft over the second, third, and fourth floors, again at a rent of around £16/sq ft, and with a lease expiry in 2023.

Regus is also based in Horton House in 23,500 sq ft; the serviced office firm signed up for the space in January 2018 with two years rent-free.

At the ground floor, the retail occupiers are tapas bar El Gato Negro, Equire Coffee; Philpotts; and Fazenda.

The building generates a passing rent of around £5.6m a year, equating to a rent of around £15.50/sq ft on average. Headline rents at Exchange Flags now stand at £17/sq ft, driven by a shortage of available office space in the area.

Knight Frank represented Shelborn Asset Management on the sale while Parkdales and Mason Owen represented Ashtrom. Worthington Owen is the letting agent.

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