£85m offer comes in for the revamped Royal Exchange
AN offer of £85m has been tabled for Manchester’s iconic Royal Exchange.
Global real estate firm Hines has made the offer on behalf of German pension group Bayerische Versorgungskammer, which has given Hines a €1.3bn investment mandate for retail assets.
The 280,000sq ft Royal Exchange once saw 80% of the world’s finished cotton traded under its roof and was opened in 1921 by King George V and Queen Mary.
It is being offloaded by Starwood Capital Group and Trinity Investment Management, which acquired the building from M&G Real Estate for £45m in 2014.
The two companies have carried out a comprehensive refurbishment of the building but the sale is still expected to deliver a major profit for the sellers.
Because of the vacant space and rental guarantees put in place by the sellers, the yield reflected by the acquisition price for the Royal Exchange is complex but it is understood to be close to 5%.
The building has 120,000sq ft of offices, of which 70,000sq ft is available to lease. Existing tenants include law firm Clyde & Co.
It also has 100,000sq ft of retail accommodation, which is close to fully let and includes an upgraded retail arcade.
Tenants include Molton Brown, Moss Bros, Starbucks, Accessorize, Whittard of Chelsea and Swarovski. Designed by Levitt Bernstein, the it also includes the new Royal Exchange Theatre, which was completed in 1976 and can seat up to 700 people.
The deal marks Hines’ return to the Manchester market after it sold its debut development site at the former Odeon cinema in St Peter’s Square to Castlebrooke in March.
Hines and Manchester & Metropolitan Properties had been planning a 178,000 sq ft office building on the site, known as Landmark, but ultimately decided against building such a large office scheme at this point in the cycle.
Bilfinger GVA is representing Hines; MMX and Commercial Properties acted for Starwood and Trinity IM.
None of the parties have commented.
