Stenprop has acquired a modern, well-located industrial estate in Leeds and disposed of its 50% interest in an office building in London’s West End in line with its stated strategy to transition its portfolio to focus on UK multi-let industrial (MLI) property.
Kirkstall Industrial Park in Leeds was acquired for £8.1 million from CBRE Global Investors at a net initial yield of 6.75%. It is located in a densely-populated residential and commercial area off the A65, one of the main arterial routes into the centre of Leeds from the west. It comprises 14 units, totalling 111,081 sq ft of industrial space, with one vacant unit that Stenprop has already put under offer to a new tenant. The weighted average unexpired lease term is 5.4 years to lease expiries and 4.1 years to lease breaks.
The half share in 25 Argyll Street, located close to Oxford Circus, was sold to the holders of the remaining 50% interest for £22.8 million. The price values the property at £83.4 million after allowing for finance and the 50% stake. The sale price is an increase of approximately 4% above the September 2017 valuation. The 63,090 sq ft building is let at an average rent of £65.15/sq ft to a mix of tenants, including H&M, Live Nation and Spotify.
Stenprop intends to sell the majority of its non-MLI assets over the next few years and utilise the sale proceeds to build a focused UK MLI business. Kirkstall Industrial Park is the seventh estate acquired by Stenprop since its purchase of the Industrials.co.uk portfolio for £127 million in June 2017. In December 2017, the company sold its office building in Pilgrim Street in the City of London at a price that valued the building at £79.9 million, a premium of approximately 2.5% to valuation.
Julian Carey, Executive Property Director of Stenprop, said: “We are making excellent progress in transitioning Stenprop into a focused UK MLI business.
“Kirkstall is located close to Leeds City Centre and benefits from very strong supply-demand dynamics, as evidenced by our early letting success. Leeds is a place we have been targeting for some time and we are delighted to have finally acquired a high-quality multi-let industrial estate in this important regional city.
“We believe there is a great opportunity to apply a programme of improvements and asset management initiatives to sustain high occupation levels and enhance the quality of the estate, and we will work with the existing occupiers on site as part of this.
“25 Argyll Street has delivered very strong returns to us in the time that we owned it with our joint venture partners. This highly significant sale releases further funds to reduce our overall leverage and reinvest into MLI and is well timed immediately prior to our London listing later this month. We have a strong pipeline of future MLI acquisition opportunities which should maintain the momentum as we reposition Stenprop as a leading MLI business in the UK”.
Stenprop was represented in the acquisition of Kirkstall by Ryden and the vendor was represented by Knight Frank. The Buyer of 25 Argyll Street was represented by Westminster Real Estate.