Downing sells Graeme House for £8m

Investor and asset manager M7 Real Estate has bought Graeme House in Liverpool from Downing for £8.07m, reflecting a net initial yield of 13.5%.

M7 has acquired the asset on behalf of its M7 REIP III fund, which specifically targets regional value-add commercial real estate opportunities.

Situated on Derby Square, Graeme House totals 87,000 sq ft of office space and is 92% let to 22 tenants, including The Secretary of State for Communities & Local Government, Reed In Partnership, Keaney & Co Solicitors and New College Manchester. The property generates £1.2m of passing rent each year.

Graeme House was first put on the market by Downing in 2015, after the developer investor completed a refurbishment of the building.

Downing’s disposal is part of its strategy to exit some of its historic office assets and focus increasingly on the student accommodation market, with schemes underway such as the River Street development in Manchester.

Will Hunting, senior acquisitions manager for M7 Real Estate, said: “The acquisition of Graeme House demonstrates M7’s long standing track record in purchasing assets where there is scope to create further value through our multi-let strategy. We have identified an opportunity to build on the property’s existing strong offer and to reposition the asset to accommodate a market that has seen a surge in demand for high quality, flexible and small suite office space. In addition, the property grows M7 REIP III’s high quality, diversified income stream and presents an opportunity to drive performance through active asset management.”

John Clegg, head of property management at Downing, said: “Downing has been a proud custodian of Graeme House for many years and has invested heavily to upgrade this landmark building to a high standard. With the building in great condition and almost fully let, we felt the time was right to see it pass into new hands and look forward to seeing Graeme House continue to thrive under new ownership.

“In Liverpool, Downing will focus on the continued transformation of its No.1 Old Hall Street development into a high quality building that befits its location and prominence in the city. The immediate next step of this process includes re-modelling and extending the reception area and creating new 5,000 ft Grade A office space above Pret-A-Manger as part of a full internal and external refurbishment.”

Hitchcock Wright & Partners acted for M7 and CBRE represented Downing.