CBRE Investment Management has exchanged on its acquisition of the Halo office in Bristol from Tesco Pension Fund for a 5.61% net initial yield which translates to a price of around £73 million in a bellwether transaction for UK regional offices, CoStar News can reveal.
Tesco Pension Fund appointed Savills to sell the landmark, highly sustainable, multilet office in Bristol city centre at the beginning of the year 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.
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 and a half ago but the sale price will be welcome evidence that the market has strengthened. It also underlines the divergence between high quality sustainable space and secondary offices.
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 their Halo office 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 featuresdigital 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.
Halo’s modern 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.