CBRE Investment Management has completed on its acquisition of the Halo office in Bristol from Tesco Pension Fund in a bellwether transaction for UK regional offices, a year after it first went under offer, CoStar News can reveal.
CBRE IM exchanged to buy the office at a 5.61% net initial yield, which translates to a price of around £73 million in June 2023. But negotiations are understood to have seen the price fall to a sub-6% yield, or around £71 million, at completion this week.
Tesco Pension Fund appointed Savills to sell the landmark, highly sustainable, multilet office in the city centre at the beginning of 2023 for £70.30 million or a 5.75% net initial yield and there was competitive bidding, according to multiple bidders.
CoStar News revealed in February that CBRE IM had entered exclusive talks and commercial property investors have been waiting to see if the deal would complete as a key indicator of pricing for the very best regional offices.
The office, as a best-in-class regional city centre asset, might have traded at closer to a 4.75% net initial yield a year three years ago.
CBRE IM is also buying the building with some vacancy with the clear view that it can improve rents from the net initial yield to a better equivalent yield.
CoStar News revealed that Cubex and Fiera Real Estate had secured forward funding for the building in Bristol from Tesco Pension Fund, for £70 million or a 5.55% yield, in April 2020.
The 116,000-square-foot, Grade A office is part of Finzels Reach, a £400 million city centre quarter.
Halo is one of the greenest office buildings in the UK, with a BREEAM Outstanding accreditation. The building also has digital connectivity recognised with the highest Wired Platinum score.
In February 2020, international legal firm Osborne Clarke agreed to take nearly two-thirds of Halo, 74,000 square feet, in a prelet deal, two years ahead of completion.
The design features a corkscrew-like staircase rising up through a glass atrium.
Bristol developer Cubex bought the former Avon Fire and Rescue site in 2018 on behalf of Fiera Real Estate Opportunity Fund IV (UK), a "programmatic venture" by Fiera Real Estate that is exclusive to clients of CBRE Global Investment Partners.
Knight Frank advised CBRE IM while Savills advised Tesco Pension Fund.
In a slow year for regional office investment, Bristol has been a standout city.
CoStar News revealed last month that Abrdn has sold Imperial Brands’ Bristol headquarters for more than £30 million, reflecting a 7.96% net yield for the out-of-town office building. Northtree Investment Management has bought the circa 58,000-square foot building. It has served as the home of the tobacco firm since 2013.
Earlier in February BNF Capital, a London-based investment office owned by members of the Anglo-French Perrodo family, working with Morgan Capital, bought Programme for £36.5 million.
CoStar News understands that Redcliff Quay, the third property, is under offer to an alternative use buyer for circa £17 million. The canalside property is owned by Legal & General, with Knight Frank appointed on the disposal.
At the beginning of March UK Commercial Property REIT (UKCM), which is in merger talks with Tritax Big Box REIT, sold its 67,000-square-foot office building in Bristol, to Tri7.
2 Rivergate in Temple Quay has been sold for £14.5 million.