High profile Birmingham city centre scheme achieves 4.5% yield

Investment in Birmingham city came to a record close at the end of 2015, when Aviva Investors, acting for Aviva Life and Pension UK Ltd concluded the sale of the Exchange Buildings, which sits directly adjacent to Grand Central Shopping Centre and New Street Station, to Orchard Street Investment Management (‘Orchard Street’) on behalf of St James’s Place Wealth Management.

The undisclosed sum reflected a net yield of 4.5% – one of the keenest yields paid for a retail asset in Birmingham during this cycle.

Exchange Buildings, fronting both New Street and Stephenson Place, comprises four highly prominent retail units extending to 25,853 sq ft, anchored by HSBC Bank and McDonalds, and a landmark 140 bedroom Premier Inn Hotel.

Julian Cobourne, asset manager at Aviva Investors said: “The deal was the culmination of a carefully managed asset management program, undertaken over a number of years. Firstly, to pre-let and refurbish the tower element of the property, which was successfully achieved to Premier Inn Hotels. This followed with a regear of the headlease with The Governors of King Edward Sixth School in Birmingham, increasing the unexpired headlease term from 56 to 200 years.”

Tom Chadwick, investment transactions manager at Orchard Street, commented: “The Exchange Buildings occupy an excellent position in the heart of Birmingham’s retail core offering both income security, with a WAULT of 14 years, and access to rental growth following the adjacent redevelopment of Grand Central and the entrance of new occupiers, such as Apple, to the Birmingham market.”

Acting on behalf of Aviva Investors, Ben Kelly capital markets director from JLL’s Birmingham offices in Church Street said: “Our client considered that with the completion of the asset management plan, it was an optimum time to dispose of Exchange Buildings at a premium. Clearly the development of New Street Station, Grand Central and the opening of the new John Lewis also played a critical part of not only the timing of sale, but the positive message we were able to present to prospective buyers. With Apple taking the unit directly opposite, the surrounding area has been transformed over the course of the last 3 months.”

Acting on behalf of Orchard Street, Richard Fletcher-Brewer of GBR Phoenix Beard commented: “The property benefits from some of the highest pedestrian footfall in the city, which combined with limited supply and the introduction of new infrastructure works; such as HS2, means we anticipate the property will strengthen further – providing long term security for our client.’”