The listed property investor has exchanged contracts to sell a trio of buildings known as the Powerhouse Portfolio to real estate funds managed by Pictet Alternative Advisors and XLB Property.
The Manchester assets are the Tootal Buildings on Oxford Road, 35 Dale Street in the Northern Quarter, and Fourways, adjacent to the Dale Street property.
The gross sale price of £119m represents a blended net yield of 5.2% on the contracted rent, and a blended capital value of £329 / sq ft.
Helical said in a statement on Friday that the net proceeds are “at a marginal premium to the March and September 2020 book values” and will be used for reinvestment into new opportunities and to repay debt. The firm intends to refocus on its core central London market, it said.
The Tootal Buildings comprise two grade two-listed interlinked office buildings totalling 245,907 sq ft of office space, acquired by Helical in March 2014. Since the acquisition, Helical has undertaken a programme to refurbish the vacant office space and improve the common areas, including adding a café and revitalising the reception areas.
The building is currently 100% let and delivers a total headline rent roll of around £4.7m, according to Helical.
35 Dale Street is another grade two-listed building in the heart of Manchester’s Northern Quarter. It provides around 49,130 sq ft of office space, as well as 7,079 sq ft of food & beverage space.
Helical acquired the asset in March 2015, and the building has undergone a full refurbishment and is currently 96% let delivering total headline rent of around £1m.
Finally, Fourways House is a grade two-listed former packing warehouse on Hilton Street, adjacent to 35 Dale Street in the Northern Quarter. Helical acquired the property in July 2018 and has completed a recent refurbishment to upgrade vacant office space and reposition the central atrium and external elevations.
The building provides 48,402 sq ft of office space and 11,607 sq ft of F&B space. It is 73% let and delivers a total headline rent roll of around £1m.
Helical was advised jointly by real estate advisory firms TT&G Partners and CBRE, while the buyer Pictet was advised by Acre Capital Real Estate.
Matthew Bonning-Snook, property director of Helical, said: “Having carried out a significant enhancement of these assets during our period of ownership we feel the time is right to recycle the equity into new opportunities, with our focus being on our core central London market.”
Charlie Baigler, head of real estate acquisitions at Pictet, added: “This is a landmark purchase for our investment strategy. The Manchester office market has proven to be extremely resilient, with excellent supply and demand fundamentals.
“Manchester is attracting and retaining talented young professionals, the city is now the largest technology hub in the UK outside of London and is proving to be a significant beneficiary of ‘north shoring’.”
The quality and location of the assets “ensures strong downside protection against the anticipated market volatility ahead”, he added.
“Our partnership with XLB Property ensures the highest standards in technology enabled property management, with a strong focus on ESG [environmental, social, and corporate governance].”
The three assets were put up for sale in September.