Prime office space changes hands
Sainsbury’s Bank HQ in Edinburgh sold in £19m deal
Sainsbury’s Bank headquarters at Edinburgh Park has been sold by Aviva Investors for £19 million. CCLA has acquired the 84,373 sq ft building at 3 Lochside Avenue for the Local Authorities Property Fund. The deal represents a yield of 6.31%.
The four floor building is let to Sainsbury’s Bank until September 2029and generates a current passing rent of £1.2 million a year.
The sale is another milestone in the story of Edinburgh Park. With a vacancy rate of only 4.5%, it is home to a raft of national and international occupiers including Aegon, BT, Diageo, HSBC and JP Morgan, employing more than 7,000 people.
Established in the early 1990s, the 1 million sq ft of offices are spread over 148 acres. There are plans to extend on to the vacant land close to the Edinburgh Park rail station.
JLL acted for Aviva Investors on the Lochside sale and Savills acted for CCLA on the acquisition.
Colin Campbell, senior surveyor at JLL, said: “The sale of 3 Lochside Avenue underlines the strength in demand for the regional office market. The property fundamentals alongside the occupational success story at Edinburgh Park, limited availability and rental growth, presented an opportunity for Aviva Investors to exit their holding and maximise their return.”
Louise Swinden associate director at Aviva Investors said: “Our investment in 3 Lochside Avenue has performed extremely well. Funding a comprehensive refurbishment of the property enabled us to create Grade A office accommodation which is rarely available in West Edinburgh. With the subsequent letting to Sainsbury’s, we managed to secure one of the UK’s highest profile household brands on a 15 year lease, which ultimately allowed us to release enhanced value for the fund.”
Rod Leslie, associate director in Savills investment team in Edinburgh who advised CCLA on the acquisition, said: “We are delighted to have secured this prime HQ office investment on the prestigious Edinburgh Park. It reflects our confidence in the location and the underlying property fundamentals, including the tenant, longevity of the income stream and the potential for future rental growth.”
CCLA’s LAPF now stands at £570m.