BMO Real Estate Partners (BMO REP) announced that its UK Property Fund has completed three acquisitions for a total consideration of €55.6m (£49.4m). Together the new assets provide a blended initial income return of 5.14% while offering scope for income enhancement and further increasing the portfolio’s weighting towards the office and industrial sectors. The acquisitions comprise a modern, industrial warehouse unit in Portsmouth, an office building in the growing Yorkshire financial and commercial centre of Leeds and a mixed-use asset in Bath.
The warehouse unit in Portsmouth provides 39,850ft² of space offering medium-term reversionary potential. The property is located on the M27 motorway junction, which provides access west to the port town of Southampton and north to London via the M3, in a market with limited new stock and which is seeing strong rental growth.
The Fund has also acquired Minerva House in Leeds, a 58,000ft², 11 storey office building that was comprehensively refurbished in 2016. Multi-let on a WAULT of around nine years to 13 tenants with strong covenants, including Gateley plc, BNP Paribas, Standard Life and UBS. The property also has two 11,900ft² leisure units over the basement and ground floors, which are both fully let. One small office suite remains vacant which provides scope to set a new rental tone for the building. Minerva House is situated on East Parade, in the centre of Leeds’s professional district and close to Greek Street, which is the city’s prime leisure area.
Finally, Cambridge House in Bath is a mixed-use office, leisure and retail property in the heart of Bath, a designated UNESCO World Heritage site with an affluent population, two universities and a diversified and rapidly growing economy. Comprising 52,400ft² spread over the basement, ground and four upper floors, the asset is fully let to six tenants, including four office occupiers, on WAULT of nine years. With a reversionary yield of 5.81%, the property offers significant potential to generate income growth.
Guy Glover, Fund Director, of F&C UK Property Fund at BMO Real Estate Partners commented: “These latest transactions reflect our disciplined efforts to deploy the Fund’s equity into opportunities that will further improve income returns and, importantly, offer potential to unlock value with our asset management expertise. We have a steady pipeline of opportunities that meet our investment criteria and we look forward to making further announcements in the near future.”
