Schroders announces first Regional Office Property Trust acquisition
The Regional Office Property Unit Trust, advised and managed by Schroder Real Estate, has acquired the Aztec Centre on Aztec West Business Park in Bristol from Aztec Centre 2 LLP for £10.375 million. The price reflects a net initial yield of 7% based on the contracted rent of £773,561 per annum.
The Aztec Centre is a freehold property prominently located at the front of Aztec West Business Park, Bristol’s prime out of town office location. It comprises a 54,555 sq ft multi-let office building with ancillary ground floor retail. The property is let to 11 tenants at an average rent of £16 per sq ft with an average unexpired lease term, assuming all tenant breaks are exercised, of approximately four years.
There are currently five vacant units on the ground floor, representing approximately 15% by area, creating an opportunity to add value by refurbishing and re-letting the units to increase net income. Assuming market rents on letting the reversionary yield is approximately 8%.
This acquisition is the first for the Regional Office Property Unit Trust that launched in December 2015 with £100 million of funding available. The fund is seeking to capitalise on the recovery in regional office markets by acquiring property offering good fundamentals in target cities and towns with strong and diversified local economies.
CBRE acted for Schroder Real Estate and Allsop acted for Aztec Centre 2 LLP.
Nick Montgomery, Head of UK Real Estate Investment at Schroder Real Estate, said:
“This acquisition satisfies our investment criteria by offering a good quality building in an established location. There is also potential for income growth from asset management as well as rising rental values due to the increasing differential between Bristol city centre rents and good quality space out of town where there has been no recent new development.”
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Schroder Real Estate
Schroders has managed real estate funds since 1971 and currently has £12.4 billion[i] (€16.8 billion /US$18.7 billion) of gross real estate assets under management as at 30 September 2015.
Most of the property funds referred to are unauthorised collective investment schemes as defined in the Financial Services and Markets Act 2000. Promotion of these funds is restricted and access to full information about these funds is only available to those exempt from the restriction.
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Schroders is a global asset management company with £294.8 billion (EUR 400.0 billion/$446.5 billion) under management as at 30 September 2015. Our clients are major financial institutions including pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.
With one of the largest networks of offices of any dedicated asset management company, we operate from 37 offices in 27 countries across Europe, the Americas, Asia and the Middle East. Schroders has developed under stable ownership for over 200 years and long-term thinking governs our approach to investing, building client relationships and growing our business.
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[i]Includes holdings of Real Estate Capital Partners and Schroders Multi-asset Funds in the Real Estate AUM