Quays office block bought for £17.6m by property investor
PROPERTY investment company Picton has acquired the fully-let Metro in Salford Quays for £17.6m.
The building on Trafford Road is close to the BBC’s home at MediaCity UK.
Picton says that after finance costs the transaction will increase the company’s net income by about £0.9m a year, rising to £1.2m per annum in April 2017, reflecting an increase in dividend cover of 5% and 7% respectively.
Constructed in 2008, the building comprises a 71,000sq ft office building with a BREEAM “Excellent” rating and 228 car spaces. The location adjacent to the Exchange Quay tram link also provides excellent connectivity to the surrounding area.
The property has four tenants producing income of £1.15m per annum, which will increase to £1.53m per annum in April 2017, with an average lease length of 8.3 years to expiry (5.6 years to break). It is let off a low average rent reflecting £21.50 per sq ft, including the car parking spaces.
The price a net initial yield of 6.2%, rising to 8.3% in April 2017 and a capital value of under £250 per sq ft, which is close to the cost of construction.
The purchase was funded using proceeds from the disposal in November 2015 of a small low yielding retail unit and £15.8m from Picton’s revolving credit facility.
Following the acquisition the company has more than £87m of uncharged assets and over £10m of undrawn facilities still available.
Michael Morris, chief exectuive of Picton Capital, said: “This is a high quality office which will further enhance our portfolio. Recognising the growing importance of this location in both a micro and macro context, we are confident that this asset will make a positive contribution to both income and capital growth.”