CLS Holdings plc has announced that its wholly owned subsidiary, Durnvale Limited, has exchanged contracts to buy Apex Tower, High Street, New Malden for £21.46 million including costs (approx. 25.8 million).
Apex Tower consists of 15 upper floors of offices (9,185 m²), four retail units and a public house at ground floor level (1,265 m²) and a four-story car park at the rear. It is fully let save for one retail unit (74 m²), which is under offer and in solicitors' hands.
The building produces £1.86 million income p.a., of which 94% is from BAE Systems which has a lease on the whole of the offices expiring in June 2020. The retail tenants include Tesco Stores and William Hill Organisation. The net initial yield to CLS is 8.66%.
Sten Mortstedt, Executive Chairman of CLS, commented:"We are delighted with this acquisition which provides an excellent long-term income stream from blue-chip tenants together with a number of short and medium-term asset management opportunities. It continues our focus on owning cost effective offices, which generate reliable cash flow.
Apex Tower marks CLS's first acquisition in the London market since 2006. We believe that there are now selective opportunities for well financed purchasers with strong balance sheets. The rush to buy commercial property by institutional investors at the start of the year has subsided, leaving a more sensible and settled market closer reflecting its fundamentals."
The vendor, The Palmer Active Value Fund II, concluded a lease re-gear with BAE following acquisition in 2006 and also secured a letting to Tesco in 2008. Savills represented CLS and Knight Frank and BNP Paribas advised the vendor.
Source: CLS Holdings plc