Asset overview and performance
St Ann’s House is a mixed-use office and retail building in Manchester city centre, prominently located on St Ann’s Square, near to the prime retail core. St Ann’s Square features a listed church, the Royal Exchange Theatre, a mix of office occupiers and high-quality luxury retail as well as leisure operators. The building benefits from its proximity to two tram stations. It was acquired in May 2022 for £14.7 million. As at 30 September 2024, the asset was valued at £12.0 million, reflecting a net initial yield of 7.6% and a reversionary yield of 11.6%. Over the six-month period to 30 September 2024, the asset delivered a total return of 6.7% which compared with the MSCI All Offices over the same period of -0.2%.
Key activity
- Relocated Watt Utilities Limited from the 5,077 sq ft fifth-floor office to the 8,269 sq ft third-floor office which was vacated during the period. Under the new lease the tenant will pay a rent of £25.50 per sq ft or £210,859 per annum on a 10-year term. This is a 53% uplift on the previous passing rent on the third floor. The tenant will benefit from three months of rent free, in the form of six months at half rent, and has a break option in year five.
Strategy looking forward
- Completed a NZC audit which provided a detailed plan to decarbonise the asset and plan for resilience against regulatory requirements and market expectations. This report informed the enhancements implemented as part of the works described below.
- Undertake a Cat A refurbishment of the fifth floor (top floor) with a view to securing a rent of £28 per sq ft given the sustainability and amenity improvements from the broader works, which would reflect a 74% uplift on the previous passing rent on the floor.
- At the same time, undertake an extensive refurbishment of the ground floor, basement and common areas with a focus on enhancing sustainability performance of the asset. Works will begin imminently and include an expansion of the reception having now secured ground floor space from a current tenant. We will create a new entrance, together with a new cycle storage area, shower facilities and lounge in the basement linked to the new reception with modern furniture. The external facade will be refreshed with new glazing to the rear, and an upgrade to lighting and signage. Photovoltaic panels will be installed on the roof to enable on-site renewable energy generation. We are targeting an EPC rating of ‘A’.
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