Review of the Week: Hat-trick of major property deals completed

CONFIDENCE in Yorkshire’s commercial property market looks to be improving following the completion of three deals for a total of more than £50m.

UK Islamic bank Gatehouse has acquired One Sovereign Street, the home of BT’s regional headquarters in Leeds, for £40.17m, while commercial property company Bruntwood has purchased City House in the city for an undisclosed sum.

The acquisitions follow the £10.2m purchase by Invista Foundation Property Trust of The Portergate, a 50,343sq ft building in Sheffield let to Aviva Life and Pensions.

Real estate adviser DTZ acted for Gatehouse Bank on the acquisition of One Sovereign Street from UK fund manager La Salle on behalf of Royal Mail Pension Fund, which was advised by Stephenson Day.

The Grade A office space, totalling in excess of 139,000 sq ft, is let on a single lease to BT until September 2020. The deal represents a net initial yield of 6.75% and one of the region’s largest transactions of 2010.

Built in 2002, the building is situated close to Leeds railway station.

Gatehouse is a fully Shariah compliant investment bank based in the City of London bringing fully researched investment opportunities to its target investor base.

One Sovereign Street represents Gatehouse’s third real estate acquisition in the UK having acquired the headquarters building of Proctor & Gamble in Weybridge, Surrey in December 2009 and a portfolio of student accommodation units in Liverpool and Loughborough in March 2010.

Adam Cavanagh, vice president of Real Estate at Gatehouse, said: “This latest acquisition brings the total value of our UK portfolio to more than £100m.

“This is a major transaction, particularly in a recovering market, and makes a significant addition to the high quality portfolio that we have established for our clients over the last six months. It is clear that the appetite from Islamic investors for prime real estate investments remains unabated, and we look forward to working on further acquisitions in the near future.”

Tim Cameron-Jones, investment director at DTZ in Leeds, said: “We are thrilled to have been involved in this acquisition which represents one of the largest transactions in Leeds in 2010. We worked closely with our colleagues in London to effectively advise Gatehouse Bank throughout the deal to secure a high quality building in a prime city centre location.

Comprising 120,000 sq ft of office space over 12 floors, City House is situated above Leeds train station and has been stripped out by the building’s previous owners.  

Family-owned Bruntwood plans to work closely with Network Rail and Leeds City Council to regenerate the building, incorporating Grade A office space and serviced office space to accommodate all sizes of business, and in addition there will be meeting and conferencing spaces for hire.

The acquisition of City House will bring Bruntwood’s total office space offering in Leeds to 390,000 sq ft, spread across the buildings of West One, Hepworth Point, West Gate and 14 King Street .

Craig Burrow, Bruntwood’s head of sales and development in Leeds, said: “Bruntwood are delighted with the purchase of City House and we are looking forward to transforming and managing the building in the long term.

“With extensive experience of similar schemes in Manchester , Liverpool and Birmingham , we’re confident that we can revitalise the building, enhancing the building’s existing infrastructure in what is without doubt, a fantastic business location in Leeds city centre.

“We believe in investing in the fabric of the cities we operate in and wherever possible, we recycle buildings instead of knocking them down and starting again. This is part of our company ethos to avoid waste and help create sustainable cities.

“We’re looking forward to playing a greater role in Leeds ’s property market and we’re keen to acquire more space in the future.

Bruntwood offer flexible leases and a wide variety of office space, but expanding further in Leeds will provide our customers with the additional flexibility to grow within the Bruntwood portfolio.”