French real estate fund Iroko Zen has completed the acquisition of the Brinell Building office on Station Road in Brighton for £27 million or a 7.5% yield.
The 63,492-square-foot building has been bought from the UK's largest wealth manager St James's Place, which is in the process of winding down its three UK property funds, triggering an £1.84 billion assets sale. The building sits within the Property Unit Trust, as reported.
Orchard Street bought the office in 2019 for the Trust from McAleer & Rushe for £39 million, reflecting a yield of 4.75%.
In a LinkedIn post confirming the sale the French SCPI said the building was two minutes from Brighton train station, offering "optimal accessibility".
It said the building completed in 2019 and is highly sustainable. It is occupied by three tenants with a weighted average lease to break of 4.3 years. The tenants are law firm Dehns, Unity Technologies and Diversified Communications. Iroko Zen said the acquisition was in line with its strategy to invest in "quality, diversified and sustainable assets, generating solid income for our investors".
France's real estate funds, or SCPIs, have been increasingly busy acquirers of UK commercial real estate, particularly in the £20 million to £40 million price bracket, in part because the market for such assets has fewer bidders and has repriced quicker than in their native France. For a video discussion of this trend with another key investor, Corum Asset Management's president Philippe Cervesi at the Mipim conference in Cannes, click here.
Knight Frank advised Iroko Zen; Orchard Street advised by Acre Capital has advised St James's Place.
Announcing the proposed wind-down of its property funds last year, St James's Place blamed the downturn in property markets since the COVID-19 pandemic began, which it termed “a challenging period for the sector as a whole”, as well as the expected regulatory changes to open-ended property funds being explored by the Financial Conduct Authority and the Bank of England.
The company is winding down its Property Unit Trust, Pension and Life funds, which collectively have £1.84 billion of assets. The Property Unit Trust holds £789.4 million of real estate assets, the Property Pension Fund has £622.8 million, and the Property Life Fund £428.4 million.
Ares is understood to have struck a deal for around £200 million of the assets, as reported.
(This story has been updated to include the correct price.)