Bridges Ventures (“Bridges”), the specialist sustainable and impact investor, has completed the sale of Airedale House, a 41,432 sq. ft. mixed retail and office property in Leeds city centre, to GM Legato Property. The sale price of £6.625m reflects a net initial yield of 8%.
Bridges bought Airedale House in December 2013, via its first Bridges Sustainable Property Fund. It then undertook a substantial environmentally-led refurbishment of the property, including the installation of solar photovoltaic panels on the roof to generate electricity for the common areas. This helped to reduce the building’s carbon footprint by more than 1,000kg of CO2 per annum, improving its EPC rating from D to B, while also reducing energy costs for tenants.
The asset management strategy pursued by Bridges for Airedale House enabled the transformation of what was previously a half-vacant building into one that is now approaching 100% occupancy – bringing this prime-positioned commercial space back into economic use. The property is currently multi-let to a variety of tenants, including Sally Salon Services, Slaters Menswear, Optical Express and The Prince’s Trust.
The buyer, GM Legato Property Ltd, is an investment company set up by Yorkshire-based private investor Graham Goodwin. CBRE advised Bridges on the sale, while Knight Frank acted for GM Legato Property. Lloyds Banking Group provided debt to support the investment.
Guy Bowden, partner at Bridges Ventures, said:
“Bridges’ investment in Airedale House is a perfect illustration of how positive societal impact and commercial value growth can go hand-in-hand. By incorporating sustainable features in our refurbishment, we were able to not only reduce carbon emissions but also cut energy costs – which made the building more attractive to prospective tenants, and in turn investors. It has also confirmed our belief that West Yorkshire is an extremely attractive investment destination, and we remain actively on the look-out for further opportunities in the region.”
Alex Whiting, senior director at CBRE, said:
“The refurbishment of Airedale House created a very compelling rental proposition for both retail and commercial tenants. So it’s no surprise that the building is almost back towards full occupancy, nor that it proved to be so attractive to potential buyers. We had strong interest from investors in North America, Asia and Europe – although the eventual buyer was based right here in Leeds.”
Bridges’ investment in Airedale House is in line with its strategic focus of investing in niche sectors and emerging locations. Leeds, like many regional hubs, suffered from a lack of investment during the downturn; Bridges recognised that this would create a strong demand for high-quality office space, which could also have a positive social impact by supporting local businesses and employment. Bridges also took the opportunity to substantially improve the building’s sustainability credentials – a growing trend in the property sector – building on the similar work it has carried out at many other commercial properties in its portfolio.
Other Bridges investments in this sector have included 158-170 Edmund Street, two adjacent office properties in Birmingham; The Office, a specialist provider of flexible office space; and 6 East Parade, a 45,000 sq. ft. office building in Leeds’ main commercial district.
In the time since acquiring and now disposing of this asset, Bridges has raised another dedicated property fund: the £212m Property Alternatives Fund III, which held a final close in June 2015 and has a total firepower of up to £500m. This fund is currently more than 75% through its deployment, having completed more than 14 deals over the last two years – testament to the amount of opportunity in the market for deals of this type, and the growing institutional appetite for impact-led property investment, on both sides of the Atlantic.
