The Valesco Group together with AIP Asset Management has exchanged contracts to acquire Microsoft’s UK HQ campus in Reading for €112.5m (£100m) from special servicer Solutus and FI Real Estate Management. The price represents a net initial yield of circa 6.6%. The investment is backed by a consortium of South Korean institutional investors.
Comprising 246,138ft² of grade A office space across three buildings, the property is strategically located in Thames Valley Park which is less than three miles from Reading town centre, the closest of Reading’s three major business parks. The landmark freehold campus was developed by Microsoft and is let in its entirety to Microsoft Limited at an average rent of €30.4 (£27) per ft².
The acquisition builds on Valesco’s and AIP’s substantial deployment of capital in the UK market in 2018 which commenced with the €278.9m (£248m) acquisition of Cannon Bridge House in the City of London, also backed by South Korean investors. BNP Paribas Real Estate advised Solutus and FI Real Estate Management.
Shiraz Jiwa, CEO of The Valesco Group, commented: “This acquisition demonstrates our ability to unlock a complex holding structure by acting quickly and having the capital available to deploy. By doing this, we have secured a prime, sought-after asset in a strategically important location, which is generating high-quality income backed by an exceptional covenant. We are very pleased to be adding Microsoft to our portfolio of blue-chip tenants. The real estate fundamentals underpinning Reading are increasingly compelling and its entrepreneurial talent pool is very attractive to multinational occupiers. This transaction continues our commitment to the UK market where, in addition to mainland Europe, we see strong potential to further deploy capital to deliver value for our investors.”
