Middle East investor Sidra Capital has bought London Square, three offices totalling 133,400 square feet in Guildford in Surrey, in a clear pointer to where pricing has arrived at for core-plus investments.
M&G Real Estate, advised by Knight Frank, first brought 1, 2 and 3 London Square to market around a year ago seeking £59 million, or a 6.5% yield. The buildings have now sold for £41.1 million, reflecting a 9.35% yield and £308 per square foot. ACRE advised Sidra.
The three buildings are multilet with an average weighted unexpired lease term of around four years to tenants including WSP and Clyde & Co.
The completion highlights how core – the most prime and least risky investment opportunities – is faring against core-plus buildings, or those just outside this definition, perhaps because of age or location, and value-add investments, buildings with existing income but more risk and opportunities to improve via operational changes, market repositioning or redevelopment.
An investment expert in the South East said: "Two of the buildings have been relatively recently refurbished with brand new extensions and new floors by M&G, while the prior owner IM Properties had refurbished the other building. So this is a repositioned core-plus deal. What we are seeing is that there is very strong bidding for core buildings such as the recent sale of Halo in Bristol but core-plus buildings are trading at closer to what would be considered value-add at present, when they do sell."
The sale also highlights Sidra being prepared to move away from its traditional core focus to more core-plus and value-add opportunities.
ACRE advised Sidra and Knight Frank advised M&G.