Deputy PM Rayner’s Ministry extends lease at key Manchester site
The Government’s Ministry of Housing, Communities and Local Government, headed by Deputy Prime Minister and Ashton-under-Lyne MP, Angela Rayner, has renewed its lease at Oakland House, on Talbot Road, Manchester.
Property firm Regional REIT, which has offices in Old Trafford overseeing properties throughout the North West, revealed the deal in its trading update ahead of today’s annual general meeting.
It said the site, which the Deputy Prime Minister is expected to use as a base for several days a week, has been taken by the Government until June 2029, with the option to break in 2027, at a rental income of £59,500 pa (£10.92/sq ft) on 5,450 sq ft of space.
The Ministry is the former Department for Levelling Up, Housing and Communities, and was rebranded following Labour’s General Election victory last month.
Angela Rayner
The Deputy Prime Minister has pledged to kick-start a new ‘devolution revolution’ to boost local power.
Oakland House is one of a number of updated rental deals by Regional REIT around the country, including several in Leeds, as well as Ashby De La Zouch, Welwyn Garden City, Cardiff, Felixstowe, Glasgow, Birmingham and Bristol.
Also, in the quarter to June 30, 2024, the property company said it has made strong progress on lettings, exchanging on six notable leases to new tenants totalling 69,067 sq ft, amounting to £700,000 per annum of rental income when fully occupied, achieving an average rental uplift of 11% against December 2023 ERVs. A further seven leases have renewed amounting to 47,000 sq ft and £600,000 pa of rental income.
Three disposals, plus one part sale, were completed in the quarter to June 30, 2024, with sales proceeds amounting to £6.9m, before costs, reflecting a net initial yield of 9.6%.
In late June, Regional REIT raised £110.5m through a Placing, Overseas Placing and Open Offer, fully underwritten by Steve Morgan, founder of North West housebuilder, Redrow, through Bridgemere Investments, part of the Bridgemere Group, established by former Liverpool brickie, Morgan.
The cash will enable Regional REIT’s £50m Retail Bond to be fully repaid, eliminating this short term liability and further reducing the constraints caused by the requirement to pay coupon distributions on the Retail Bond.
In addition, £26.3m of the Net Capital Raising Proceeds will be used to reduce bank facilities, which will result in the company having greater headroom under the covenants in such facilities, and the remaining £28.4m of the Net Capital Raising Proceeds will provide additional flexibility to fund selective capital expenditure on assets, which will enhance earnings in the near term and value in the mid to long-term, further underpinning quarterly dividends going forward.
Stephen Inglis, CEO of London & Scottish Property Investment Management, Asset Manager, said: “During the quarter we were pleased to achieve further progress in the group’s letting activity and disposal programme, with £0.7m of additional notable rental income from new leases and £6.9m generated from recent disposals.
“As announced on 18 July 2024, the successful capital raise of £110.5m ensures the repayment of the retail bond, facilitate the further reduction of the LTV to 40.6%, and will provide for accretive capital expenditure on assets for the long term.”
