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Schroder Real Estate Investment Trust Ltd said on Tuesday it bought a mixed-use office and retail asset in Manchester, England for £14.7 million, in line with its investment strategy.
The UK-focused real estate investment trust said that the 51,885 square foot building is 96% occupied. It comprises of 40,277 square foot of office space over five upper floors with five retail units at the ground floor level and ancillary basement space. It is located on St Ann's Square in Manchester.
The acquisition of St Ann's House reflects a net initial yield of 7.8%. Further, the mixed-use office and retail asset generates £1.2 million per annum of headline rent.
The company added that average rent is £18.65 per square foot, however it believes that it has the potential to increase rental levels through ‘refurbishment and improving sustainability performance.’
Fund Manager Nick Montgomery said: ‘This acquisition is line with the strategy to selectively acquire income producing assets with good fundamentals and the potential to add value through active asset management initiatives.’
‘Compared to other major cities, Manchester, which is one of the company's high conviction locations, currently has the lowest office vacancy rate, and we expect relatively higher growth in office rents over the next five years,’ Montgomery added.
Shares in Schroder Real Estate Investment were down 0.7% at 54.11 pence each in London on Tuesday just before midday.
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