Listed real estate firm disposes of 63,000 sq ft Birmingham office building

Palace Capital has surrendered its short leasehold interest in a 63,000 sq ft office building in Birmingham.

The listed real estate firm has said the disposal of Priory House on Gooch Street North in Digbeth for a nominal sum of £25,000 saves the company approximately £170,000 a year.

The company acquired the leasehold interest of the building as part of the Sequel Portfolio acquisition in October 2013 with Palace Capital paying £100 a year in rent until December 2027.

Priory House was let to Forensic Archive for the same lease term at a rental of £260,000 a year exclusive increasing on review to £322,000 per annum in December 2016.

The company announced in May that it had accepted the surrender of the lease held by Forensic for a payment of £2.85m.

The company has received £2.875 million less seven months holding costs of £99,000, therefore it has effectively disposed of its entire interest for £2.78m which is 25% above the £2.1m book value as at May 2019.

Neil Sinclair, chief executive of Palace Capital, said: “This is a strong example of our team’s asset management skills. On 7 May 2019 a significant sum was received from the tenant but the crucial element was then to dispose of the leasehold interest in this vacant building which was costing the company, on an annualised basis, approximately £170,000 largely in empty rates, insurance and security. Moreover, by removing 63,000 sq ft of non-core, vacant office space, our portfolio occupancy has increased from 84% to 86%, with the remainder mostly comprising tactical vacancies as we progress our value enhancing Capex strategy.”