Palace Capital, a property investment company focusing on assets outside London, has exchanged contracts to buy a 75,000 sq ft office off Portland Street in Manchester from Regional Properties for £10.9m.
The deal is due to complete at the end of September, and is potentially subject to a downward adjustment of up to £400,000 for rent guarantees and other costs.
A sale of the building on Chorlton Street at nearly £11m would give a net initial yield of 5.5%.
The acquisition is being funded by a new debt facility from one of Palace Capital’s existing lenders and credit committee approval has been received.
According to a statement from Palace, due to the amount of regeneration taking place around Portland Street, the company has acquired Boulton House with a view to bringing it forward in the medium-term as a development opportunity.
Boulton House produces income of £625,000 each year. Around 13,500 sq ft of offices is currently vacant.
Bilfinger GVA represented Palace Capital and CBRE represented the vendor.
Neil Sinclair, chief executive of Palace Capital, said: “This acquisition continues our strategy of purchasing assets in growth locations. We have been interested in Manchester for some time but up until now we were not able to secure a property which fulfilled our acquisitions criteria and rental return. We believe Boulton House will respond to our brand of asset management to maximise the value of this property. Initially this will be achieved by letting the vacant space whilst in the medium term there is considerable development potential.”