Global expands & diversifies its real estate holdings in the UK with two new acquisitions in greater Manchester area
Structured as one transaction, this acquisition provides Global investors a sharia compliant structure enjoying a stabilized income stream with strong rental growth prospects and expected annualized cash dividends of 9%.
The first property; 6 Knowsley Place in Bury, is a modern office building constructed in 2011, extending to 14,403 sq ft of space arranged on lower ground, ground and four upper floors. It is part of a 500,000 sq ft mixed development of modern office accommodation constructed in 2011, located in the main part of Phase 1 of the Bury Town-side development, which will become the main civic quarter for Bury. The property is let to the Metropolitan Borough of Bury, with a certain lease term of 14 years unexpired.
The town of Bury, a suburb of Manchester, has recently benefited from major regeneration projects including Knowsley Place as well as The Rock (a new open shopping centre) and Dumers Lane (27 acre industrial and residential project to the south of the town centre). The town benefits from an excellent public transportation network with direct service from Bury to Manchester City centre and main railway stations, with average journey times being under 30 minutes. Bury’s occupational market is one of the better performing of the greater Manchester area suburbs, with the vacancy rate for best quality buildings standing at 4% of total stock at the end of Q4 2016.
The second property; Saint Peter’s square, is situated in the centre of Stockport, an affluent town 8 miles south east of Manchester; with a prominent frontage onto one of the main arterial routes through Stockport into Manchester. This property is a modern, high specification building in Stockport’s established commercial district comprising of a self-contained unit over basement, ground and 5 upper floors and benefits from a BREEAM rating of ‘Excellent’. The property also benefits from panoramic views and excellent levels of natural light. The building is the most modern, highest specification Grade A office in Stockport. The building is let entirely to SKY Subscriber’s Services (part of SKY Plc) with a weighted average unexpired lease term in excess of 8 years.
Stockport is one of the largest greater Manchester sub-regional centres, with a vibrant diverse economy and skilled workforce, employing over 120,000 people in over 12,000 businesses (the second highest figure in Greater Manchester). Similar to Bury, Stockport also enjoys excellent transportation links into Manchester and the surrounding areas. The town has been identified as a principal focus for development with a number of priority projects set out, including the Stockport Stock Exchange, Red Rock ( flagship leisure development project in the middle of town centre) Mersey Way ( shopping centre) as well as greater investment in transport and interchange network to support the town’s regeneration projects.
This marks the fifth transaction under the the UK National Commercial Real Estate Program which Global’s real estate asset management team launched, in partnership with London based Greenridge Investment Management Limited (“Greenridge”), in September 2015. The program strategically identifies off-market investment opportunities outside Central London that are characteristically of Grade A specification and which produce rental income derived from Investment Grade or Government tenants on long-term triple net leases. Portfolio tenants from the previously acquired properties include National Air Traffic Services (NATS), 3M Co, the National Health Services (NHS) of Scotland and most recently, Hartshead House in Sheffield City Centre, which is primarily let to UK Government.
On this occasion, Head of Real Estate Asset Management at Global Nasser Al-Khaled, commented: “This deal demonstrates our strong ability to originate transactions that carry significant untapped value. Manchester is a market which we have monitored for a while but we were very careful with our asset selection and timing, given where the prevailing valuation levels stood in the past and where they stand today. Following record leasing in 2014, and 2015 and continued demand in 2016, the acute shortage of Grade A supply is expected to result in an unprecedented complete absence of ‘ready to occupy’ Grade A space in Manchester. In the absence of new available space, Manchester will remain a landlord’s office market and we expect rents to rise in the medium term which would also spill over to Manchester’s sub-markets where our recently acquired assets are located.”
Sulaiman Al-Rubaie, Executive Vice President & Head of Alternative Asset Management, added, “We are very happy with the strong performance of our UK Real Estate program and look forward to expand this successful program to exploit further opportunities in continental Europe and the United States. This is the fifth transaction completed by Global’s real estate asset management team in almost two years and we look forward to expand our real estate assets under management to USD 1 billion in the next several years.”
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