Schroders picks up St Ann’s House
The UK-focused real estate investment trust has paid £14.7m for the central Manchester office and retail building, describing the city as one of its “high conviction locations”.
Schroders said that the deal reflects a net initial yield of 7.8%, a reversionary yield of 9.1% and a low average capital value of £283 per sq ft.
The vendor was Abrdn. Metis Real Estate acted for the buyer and CBRE the seller.
St Ann’s House generates £1.22m per year of headline rent compared with an estimated rental value assessed by the independent valuer of £1.33m. The building had previously been owned by Standard Life.
The freehold, 51,885 sq ft building, is 96% occupied and comprises 40,277 sq ft of office space over five upper floors with five retail units at ground floor level and ancillary basement space.
The building enjoys a prominent position on St. Ann’s Square, close to the square’s eponymous church and the Royal Exchange complex.
Nick Montgomery, fund manager of Schroders REIT, said: “This acquisition is in line with the strategy to selectively acquire income producing assets with good fundamentals and the potential to add value through active asset management initiatives, with a focus on improving sustainability credentials.
“Compared to other major cities, Manchester, which is one of the company’s high conviction locations, currently has the lowest office vacancy rate, and we expect relatively higher growth in office rents over the next five years.”
The office space is fully let to four office tenants at an average rent of £18.65 per sq ft. Refurbishment to improve the building’s sustainability credentials ha been floated by Schroders, along with offering fitted out office space.
Current office occupiers are Ingeos UK, insurer Ecclesiastical, broker Verlingue and Watt Utilities.
During the pandemic rents were rebased by the current landlord and there are currently no arrears, although at present two of the five units are vacant.
Current tenants are Watches of Switzerland, trading as Tag Heuer, shoe and bag retailer Russell & Bromley, and health and beauty business Space NK.