Pan European investors target South Wales commercial property market

Sale of Matrix Court, Swansea, further evidence of international funds seeking returns from regional investments

14 May 2015

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The sale of Matrix Court in Swansea to American fund Quidnet Capital - acting on behalf of Colony Capital - for £2.35m provides further evidence that the investment returns on commercial property in South Wales are attracting attention from Pan European funds. Graham Davies, Investment Director at Cooke & Arkwright, acted on behalf of a Private Trust client in the deal.

The 28,182 sq ft building, which was developed in the early 2000s by the Trust, is let to the Welsh Government and JCP Solicitors, providing an income of £282,000 per annum. Quidnet Capital had previously acquired the adjoining building on behalf of Colony Capital, let to Trilium, as part of the £97m Silverbird Portfolio in 2013. Mr Davies said it was therefore good estate management for them to acquire Matrix Court, which shows an 11.35% yield.

“This is another example of international funds seeking attractive returns in the region,” he said. “The deal follows close on the heels of another investor, Maya Capital, acquiring Building 1V Telelink at Sandringham Park which is let to DVLA, at £6.3m, showing a plus 10% yield. It is interesting to see the attention that South Wales is attracting from overseas. Clearly the returns are seen as higher than average and are valuable additions to Pan European investors.”

Mr Davies added that while seen in isolation, the properties were high up the risk curve. “But when balanced with other assets and across wide geographic areas, the risk factor is somewhat diluted within the wider fund/s. As funds seek margins on yield it is no surprise therefore to see the likes of Clearbell, Maya, Quidnet/Colony, Karling and W P Carey acquiring significant assets in the region,” he said.

In comparison, he said that interest from regional investors was limited, perhaps because they do not have a wider spread of risk within their portfolios.

Cooke & Arkwright have been providing rating valuation advice to The Welsh Rugby Union Limited (“WRU”) and Millennium Stadium plc for many years. They were recently successful in achieving substantial reductions in the assessments of the Millennium Stadium, covering both the 2005 and 2010 rating list. These negotiated reductions yielded savings of c.£3.5m which, crucially, allows the WRU to re-invest in rugby throughout Wales. They advise the WRU across the group portfolio including the National Centre of Excellence in the Vale of Glamorgan. The valuation issues across the WRU portfolio are complex requiring a high level of understanding of the funding and finances of professional sport in Wales. Cooke & Arkwright’s experience and understanding of these issues and application to the rating valuation have yielded these substantial negotiated reductions. The WRU and the Millennium Stadium entrust our work to organisations with the required levels in experience and expertise in dealing with these complex issues. I am glad to say we have this expertise in Wales. I would have no hesitation in recommending ratepayers making use of this Welsh based expertise.

The Welsh Rugby Union Limited, Welsh Rugby Union Group