A deal that will see the sale of three of Brindleyplace’s buildings for more than £100 million has been completed in one of the largest office investment deals in the region this year.
A group of private investors led by Tritax has bought Seven, Eight and Ten Brindleyplace – currently occupied by Royal Bank of Scotland plc – for £101 million reflecting a yield of 7.16 per cent.
The investors have provided £30 million of equity in the deal with the senior debt provided by Barclays Commercial Bank – a sign, according to Argent joint managing director Gary Taylor, the company that developed and now runs Brindleyplace, that banks are looking at property as a viable investment again.
He said: “First of all it has to be said that our team have been absolutely bowled over by the way this deal has been handled by Barclays and how well they responded to this opportunity. It is also a real indicator that the banks are back in the market again if the product is right.
“We said when we put these three buildings up for sale that this would be a real bellwether of the market and to achieve the price we did and looking at other activity it is clear that the market has certainly strengthened in recent months.”
Jason Constable, head of property finance, Midlands Region at Barclays, which has provided a £79 million funding package, said: “I am delighted that we have been able to provide debt facilities for the completion of this landmark deal.
"This demonstrates our appetite and ability to execute major real estate transactions and confirms that Barclays is very much open for business. Birmingham remains attractive as a regional office investment market and we are ideally placed to finance further transactions of this scale.”
Matthew Heaton, banking partner at Pinsent Masons, advised Barclays with support from Real Estate Partner Gerry Mulholland, assisted by Stewart Moore and Sean Houlihan.
Mr Heaton added: “We are extremely pleased to have advised Barclays on this very high profile transaction, which is one of the largest real estate finance deals done in the region this year.”
Birmingham-based Jones Lang La Salle acted as valuers for this transaction. Stuart Smith, associate director, said: ”The buildings represent prime, landmark offices with a secure long-term income stream and a transaction of this magnitude sends out a positive image of the city.”
Argent initially marketed the three properties for the Brindleyplace Limited Partnership at a combined guide price of £103 million while Tritax previously advised the 400 investors who originally invested in Brindleyplace Limited Partnership, which owns eight of Brindleyplace’s 11 office properties.
The partnership comprises BT Pension Scheme, which holds a 22.5 per cent stake, Royal Mail Pension Plan with 17.5 per cent, Argent with 10.01 per cent and the 400 Tritax-represented private investors with 49.99 per cent.
Competition for quality stock has seen increasing interest in Birmingham away from London and the south east by investors with phase one of Snowhill – currently occupied by KPMG with Barclays Commercial Bank also set to join them – under offer to Commerz Real, a German fund with Aerium, a French house, also in the running for the scheme with a value of around £120 million.
Australia’s Future Fund, another new entrant to the market, has also recently snapped up Land Securities’ 33 per cent stake in the Bullring for more than £200 million, reflecting a yield of around seven per cent.