Lothbury Investment Management, on behalf of Lothbury Property Trust, has disposed of its retail and office holding at 78-90 Buchanan Street and 9-17 Exchange Place, Glasgow for £31 million. The purchaser is Pontegadea.
The sale represents an initial yield of 3.99%. The 35,000 sq ft property comprises retail, leisure and offices and produces annual rental income of £1.3 million.
Buchanan Street, known as Glasgow’s ‘Style Mile’, is home to a number of international retailers and is the second busiest retailing street in the UK, after London’s Oxford Street.
At the end of last year, Lothbury agreed an extension of Vodafone’s lease on their prominent corner unit by a further 10 years from December 2019 at £320 per sq ft ITZA, a 23% uplift and a new record rental for Buchanan Street.
Mike Toft, Senior Fund Manager and Executive Director of Lothbury Investment Management, said: “Buchanan Street has been one of Lothbury Property Trust’s top performing assets since we purchased it in 2013, as a result of repositioning the property after a number of asset management initiatives.
“The building was purchased from out of administration for £17.42 million. It was a key purchase as it fitted our strategy of investing in prime locations with excellent growth potential. Indeed, rental growth has remained good despite the downturn in retail, with rents rising from £260 to £320 per sq ft ITZA in just three years.
“However, with the challenges now facing the retail sector, this was a good opportunity to sell and reinvest in other areas, particularly the industrial and alternative sectors.
“The disposal is in line with our strategy of selectively reducing the fund’s exposure to high street retail.”
The building is currently fully occupied and let to Vodafone, Lush and Starbucks on the ground floor. The first, second and third floors, comprising 16,644 sq ft of Grade A office space, are occupied by Building Design Partnerships, BNP Paribas Real Estate and Drum Property Group on. The weighted average lease term is 8.8 years.
CBRE acted for Lothbury; Sheridan Property Consultants acted for Pontegadea.