M7 Real Estate, the pan European investor and asset manager, announces that it has agreed to the £84.5 million acquisition of Bridgewater Place in Leeds ahead of a potential initial public offering of the property on the IPSX stock exchange, a new Regulated Investment Exchange regulated by the FCA and the world’s first such exchange dedicated to commercial real estate assets, early in 2021.
Completion of the acquisition is subject to a successful capital raise and the listing, in what is expected to be the second company to admit its shares to trading on IPSX. Bridgewater Place is the tallest building in Yorkshire and comprises 234,000 sq ft of grade A office space, located in central Leeds, the UK’s third largest regional metropolitan area and economy. The property is 92.6% let, including seven ground floor retail units, with the office space delivering 96% of the income. Occupiers include EY and multinational law firms DWF and Eversheds, with the property currently generating an annual headline rent amount of £5.9 million, with 100% of office rents and 99% of all rents collected since the 2020 March quarter day. A single office suite on the 9th floor of around 18,000 sq ft is currently available for lease and leasing this space forms part of the asset management plan to capture the building’s rental reversion potential.
The Leeds office market continues to benefit from strong demand and low supply dynamics, with an average vacancy rate of 2.4% for Grade A office space and just over 300,000 sq ft of available space against an average take up of c. 600,000 sq ft per annum. Demand is driven by a robust economy, continued urbanisation and further decentralisation to the regions as well as ongoing planned infrastructure investment, including HS2. Bridgewater Place is located opposite the planned HS2 station entrance. Bridgewater Place also includes approximately 200 residential units, which are separately owned and do not form part of the transaction.
Richard Croft, Executive Chairman of M7 Real Estate, said: “Bridgewater Place is a flagship regional office which is characterised by a strong rental income from a number of multinational blue chip tenants and high collection rates throughout the pandemic, as well as the potential to grow income through asset management. Leeds, as with many of the UK’s regional cities, continues to experience a severely constrained supply of quality office space and growing demand. Like the Mailbox in Birmingham, we believe Bridgewater Place offers a compelling investment opportunity to investors and we are currently preparing for a potential listing of this prime office property the on the IPSX stock exchange.