AXA Real Estate acquires prime office asset in Edinburgh for £29.7 million (UK)

AXA Real Estate Investment Managers, the leading real estate portfolio and asset manager in Europe, announces that it has completed, on behalf of the Caesar Fund, the acquisition of 3–5 Morrison Street, a core office building situated in Edinburgh, Scotland for £29.65 million (approx. €35.7 million) from Climate Change Capital, the environmental asset management and advisory group. The building is located in the heart of Edinburgh’s Exchange District, the prime office destination in the city. 

The acquisition is directly in line with the Fund’s strategy of investing in core office assets that are capable of generating secure, long term income streams with rental uplifts.

3–5 Morrison Street is an 82,282 ft² (7,644 m²) five-floor landmark building which includes 57,024 ft² (5,297 m²) of prime office space which is fully let to a leading global asset manager. The building also incorporates a newly refurbished 4,850 ft² (450 m²) ground floor retail unit, let to one of the UK’s largest supermarket chains, an adjacent 20,408 ft² (1,896 m²) four screen cinema and basement car parking.

The building has an average weighted unexpired lease term of 8.85 years.

Developed in 2003, the building has strong sustainability credentials with a number of initiatives implemented in collaboration with the existing tenants to reduce carbon emissions, including a new, BMS water – sub-metering and waste recycling regime and LED lighting installed throughout the building, resulting in a 29% carbon output reduction since 2009.

The Caesar Fund was launched by AXA Real Estate’s Italian regulated subsidiary AXA REIM SGR with a first close of €118 million in March 2012 and raised €209 million at its second close in October 2012. The Caesar Fund is a regulated closed ended fund for institutional investors targeting investments in well let “CORE” office buildings in the UK and the Eurozone.

Giorgio Pieralli, Managing Director of AXA REIM SGR, and Fund Manager of the Caesar Fund commented: “The purchase of this asset demonstrates our ability to source core investment-grade product in the UK at a time when an increasing number of investors, driven by the tightening of yields in Central London, are seeking returns in the UK’s other prime cities and fits perfectly with both the Fund’s strategy of investing in assets which have strong real estate fundamentals and excellent sustainability criteria.”

Huw Stephens, AXA Real Estate’s Head of UK Transactions, commented: “3-5 Morrison Street with its prime location, strong tenants, potential of rental growth and sustainability credentials, all within a high quality modern building, fully meets our clients’ requirement for exposure to Grade A office investments in the UK’s major business hubs.”

Esme Lowe, Partner, Climate Change Property Fund commented: “This sale further demonstrates the attractiveness of future proofed, resilient, prime assets. We are pleased to have locked in returns and CCPF has now returned over 50% of the original equity to investors. We continue to see value and new opportunities in the market. We are pleased that the sustainability credentials were recognized and will be maintained by the purchaser”.

Source: FTI Consulting

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