Mark Glatman’s Abstract Securities have announced that they have let ‘The Florence Building’ in Basingstoke, to Sovereign Housing Association, and subsequently sold the entire share capital of the Company which owns the asset, on behalf of its shareholders, to LGIM Real Assets (Legal & General).
Legal and General has bought the building on behalf of its LPI (Limited Price Inflation) Income Property Fund for a purchase price of approximately £29m.
While the property was marketed at rental levels up to £28.50 psf, the whole building was taken by Sovereign on a new 20 year lease subject to minimum and maximum uplifts linked to RPI at review. The structure of the lease resulted in an asset price yield close to 4% which enabled a substantial rent subsidy for the premises which, including all car parking, reduced the commencing rent payable.
‘The Florence Building’ represents Abstract’s most recent “uncompromising value”, office development, providing 61,415 sq. ft. plus 203 car spaces in a new multi-storey car park. The property is in Basing View, the central office core for the Town, and is the first large speculative office development to commence in the Town Centre for over 15 years. The development completed in July 2018.
Sovereign is one of the largest housing associations in the Country providing over 56,000 homes for around 130,000 people in housing need across the South and South West of England and the Isle of Wight and building around 1,600 new homes each year to rent or buy.
Sovereign was formed in November 2016, as the result of a merger between Spectrum Housing Group and Sovereign Housing Association. ‘The Florence Building’ will become the new Central Services Hub for the organisation.
“Christopher McPherson, Development Director of Abstract Securities, said: “The letting to Sovereign underpins our confidence in Basingstoke as a business destination, with its excellent transport links, first class amenities and high-quality work force, and our decision to speculatively build here is wholly vindicated by this long term commitment to the Town by a major employer. This is a huge endorsement for Basingstoke. We have generated good tenant interest since the building completed, but Sovereign were nimble and decisive. A number of other potential occupiers will be disappointed’.
Mark Glatman, Chief Executive, added, “Once again we have seen potential in a market which has been long overlooked, but where the fundamentals are good, and where there is a large catchment of skilled labour. We have delivered a new Grade A office building, attracted good occupier interest, and agreed a sensible leasing structure which provides value for all concerned at a substantial discount to office rents in the South East. We have shown again that we can offer occupiers a significant cost advantage when they relocate to one of our buildings and Legal & General, with whom we have worked before, were an obvious purchaser.’’
Derek Gilby, Senior Fund Manager of the LPI Income Property Fund, commented, ‘’This is an excellent buy for the fund, offering a secure long-term income stream off a low base which provides a hedge to inflation and strong underpin to the investment. We continue to seek public sector deals with long let assets and investment grade covenants for the Fund and will remain active in this market.’’
The Florence Building was designed by TP Bennett. Bowmer & Kirkland was the contractor. The solicitors representing the parties were Pinsent Masons acting for Abstract, Clarke Willmott acting for Sovereign and Clifford Chance representing Legal & General. DTRE acted for Legal & General in the investment acquisition. Abstract were unrepresented. Savills and RARE were the retained letting agents.
Attached image shows Abstract’s ‘Florence Building’ in Basing View, Basingstoke. -Ends-
Over the past 5 years Abstract has built over 1 million sq.ft. of net lettable offices across the UK, together with a major office refurbishment of 250,000 sq.ft. making it one of the country’s largest regional developers. The Group undertakes development as a principal speculatively and for end users. Abstract also acts as a development manager under design and build arrangements and in joint venture partnerships.
Abstract has gained a strong reputation for delivering award winning schemes, including its new range of “uncompromising value” offices. These buildings deliver high specification, Grade A space with top environmental credentials (BREEAM Excellent and EPC ‘A’ rated) with a tight design and procurement process, offering occupiers the best value and cost per workstation of any modern offices in their local market.