Helical has exchanged contracts to sell the Powerhouse portfolio comprising three Manchester office assets, to real estate funds managed by Pictet Alternative Advisors and XLB Property Limited, for a gross sale price of £119 mln (€133 mln).
The net proceeds are at a marginal premium to the March 2020 and September 2020 book values and will be used for reinvestment into new opportunities and to repay debt, Helical said.
The disposal price of £119 mln reflects a blended net initial yield of 5.2% on the contracted rent.
The Tootal Buildings comprise two iconic Grade II listed interlinked office buildings providing 245,907 sq ft of office space. Helical acquired the asset in March 2014 and has undertaken a programme to refurbish the vacant office space and improve the common areas, including the provision of a new café facility and revitalised reception areas. The building is currently 100% let delivering a total headline rent roll of £4.7 mln.
35 Dale Street is a Grade II listed building situated in the heart of Manchester's Northern Quarter. The building provides circa 49,130 sq ft of office space, as well as 7,079 sq ft of F&B space. Helical acquired the asset in March 2015. The building has undergone a full refurbishment and is currently 96% let delivering a total headline rent roll of £1 mln.
Fourways is a Grade II listed former packing warehouse located adjacent to 35 Dale Street in the Northern Quarter. The asset, acquired in July 2018, has just recently been subject to a refurbishment programme, which involved upgrading vacant office space and repositioning the central atrium and external elevations. The building provides 48,402 sq ft of office space as well as 11,607 sq ft of F&B Space. The building is currently 73% let delivering a total headline rent roll of £1 mln.
Matthew Bonning-Snook, Helical’s property director, commented: ‘Having carried out significant enhancement of these assets during our period of ownership we feel the time is right to re-cycle the equity into new opportunities with our focus being on our core Central London market.’
Charlie Baigler, head of acquisitions, Real Estate at Pictet Alternative Advisors, said: ‘This is a landmark purchase for the investment strategy of Pictet Alternative Advisors. The Manchester office market has proven to be extremely resilient, with excellent supply and demand fundamentals. Manchester is attracting and retaining talented young professionals, the city is now the largest tech hub in the UK outside of London and is proving to be a significant beneficiary of ‘northshoring’. The quality and location of the assets ensures strong downside protection against the anticipated market volatility ahead. Our partnership with XLB Property ensures the highest standards in technology enabled property management, with a strong focus on ESG.’
Helical plc was advised jointly by TT&G Partners and CBRE. Pictet Alternative Advisors was advised by Acre Capital Real Estate.