Asset manager LSPIM acquires £236m portfolio
133 Finnieston Street, Glasgow, is included in the deal
London and Scottish Property Investment Management (LSPIM) has acquired a £236 million portfolio of predominantly multi-let regional offices from Squarestone Growth.
The Glasgow-headquartered asset manager for regional office specialist Regional REIT said more than 93% of the portfolio’s value comes from 27 regional office properties that provide in excess of 1.6m sq ft of space to 192 tenants.
The remainder of the portfolio comprises two industrial units of 120,020 sq ft, a residential property with 12 tenants and a Tim Horton’s Drive-Thru restaurant.
The deal includes seven properties in Scotland, totalling over 270,000 sq ft.
The contracted annual rent roll for the portfolio is £21.9 million. This corresponds to a net initial yield of 7.8%, but LSPIM expects to ultimately realise a yield of 11%. This will be achieved through a series of asset management initiatives in the coming years to improve occupancy, rental income and capital value.
The acquisition marks a significant step in LSPIM’s execution of its strategy to focus the Regional REIT portfolio on high-yielding office property that it considers either mis-priced in the market or offers significant asset management potential.
Of the REIT’s portfolio, which was valued at £732.4 million at 31 December 2020, over 83% was in office assets. This acquisition, combined with the recent disposals in August of c.£60 million of industrial property, significantly increases the portfolio’s regional office focus.
The small number of non-office properties in this acquisition will be included in LSPIM’s ongoing disposal programme for non-core assets.