Schroders agrees £132m City Tower deal
ASSET manager Schroders has acquired Manchester’s City Tower from regional landlord Bruntwood for £132m.
The family-owned firm instructed agents at CBRE to market the 30-storey tower earlier this year after it attracted interest from several international investors.
Bruntwood was said to be looking for £125m. The sale price reflects a net initial yield of 7% and is the biggest office transaction in the region since the Co-op Group’s new headquarters building, One Angel Square, was sold for £142m last year.
In a stock market statement Schroders said it had acquired the building through the Schroder Real Estate Investment Trust, which will hold 25%, and two of its managed funds, Schroder UK Property Fund and Immobilien Europa Direkt.
The 615,000 sq ft tower – the tallest commercial space outside London – is fully let to tenants such as Indian outsourcing firm Aegis, recruitment specialist Hays, and Bruntwood also has its headquarters there. Data centre firm UKFast occupied the top two floors until it moved to its own building in Hulme last year, but it still holds a lease at City Tower.
Bruntwood bought the former Sunley Tower in 2004 as part of a £65m purchase of the run-down Piccadilly Plaza site. In 2008 it invested £38m in a revamp.
Chief executive Chris Oglesby said: “At 615,000sq ft net on a three-acre site, the building attracted a great deal of interest from parties from across the globe. We are delighted to have been able to identify a purchaser that paid a good price and could acquire this complex asset in a reasonably tight timescale.
“As important, however, was to find an organisation that will be a responsible owner of this important asset for Manchester and be a great addition to the investor base of the city. We look forward to working with Schroders, as we maintain the ongoing property management of the building and to continue to serve the customers at City Tower. “
“The capital from the sale will be recycled, allowing us to continue to deliver our substantial development pipeline.”
Duncan Owen, head of property at Schroder Property Investment Management, said: “The vendor has already made significant improvements via an extensive refurbishment programme and we believe there is further opportunity to deliver rental growth for this element of the asset in the future, underpinned by improving occupational demand. There is also the potential to generate value from asset management of the property.”
Michael Hawkins of Colliers advised Schroders while CBRE advised Bruntwood.
