Biggest Welsh investment deal in first half of 2015

The biggest investment deal in Wales this year in the first half of 2015 completed on Friday 26 June.

30 June 2015

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Knight Frank Investment Management, advised by Cooke & Arkwright, has completed the purchase of a 170,000 sq ft landmark office and hotel building, Helmont House in Churchill Way, Cardiff, from the Bishopsgate Long Term Property Unit Trust. The £34.6m deal represents a net initial yield of 6.08% and is the biggest investment deal completed in Wales this year to-date.

Graham Davies, Investment Director at Cooke & Arkwright said, "This asset is an interesting mix of secure long-term income returns from the Premier Inn element, and potential to achieve further capital growth through rental growth and yield compression from the high quality, multi-let office element."

He added, "It is also an example of increasing institutional interest in prime regional city centre offices outside of London. With Central Square development well under way, the growing stature of the city's Central Business District means buyers are waking up to the potential of Cardiff as a European capital city, being attracted to the income and capital returns achievable, especially when compared to other regional centres."

John Styles, Fund Manager at KFIM said, "We have been seeking to acquire long dated RPI leases in the so called 'alternative sectors' to provide core income which was previously provided by supermarkets, which we have sold. The office element provides a further boost to the income yield as well as some medium term upside from asset management."

Bishopsgate Long Term Unit Trust was acquired by Dutch pension fund manager, PGGM, and Legal & General Capital at the end of 2014 for £370m and is managed by Legal & General Property. Following the sale, it holds a good quality, core portfolio of 23 UK commercial properties with a strong bias to London and the South. Knight Frank advised Legal & General Property on the sale.

Will Edwards, Fund Manager to the Bishopsgate Unit Trust, at Legal & General Property commented, "Following the completion of a number of early asset management initiatives, we are extremely pleased to have delivered our business plan for the property and executed such a successful sale."

Helmont House is let to 12 tenants including Premier Inn, New Law Solicitors, Darwin Gray, Big Lottery Fund, Rightacres Property Company, Nathaniel Lichfield & Partners, Towry Services, Vectos, Blue Sky Digital Solutions, and Steak of the Art restaurant and art gallery. Built in 1984 the building has 12 floors and was originally occupied by British Gas.

Mr Davies recently sold Matrix Court in Swansea to Colony Capital - advised by Quidnet Capital, and acted last year on the sale of Admiral House, Newport to W. P. Carey; both American investment funds.