LONDON (Alliance News) - Palace Capital PLC on Tuesday said it has exchanged contracts to acquire the freehold of Boulton House, Chorlton Street, Manchester for just shy of GBP11.0 million.
The payment could be reduced by up to GBP400,000 for rent guarantees and other costs, Palace Capital said in a statement. The company expects the deal to complete on September 30.
The acquisition is being funded by a new debt facility from one of Palace Capital's existing lenders.
Boulton House is a 75,000 square foot multi-let 1970s office building in the centre of Manchester in the popular Portland Street corridor. It is within walking distance of Manchester Piccadilly railway.
Boulton House generates a net income, after all deductions, of about GBP625,000 per annum, Palace said, equal to an initial net yield of 5.5% after deductions for empty rates, service charge and insurance shortfall on 13,500 square foot which is vacant.
There are leases with rent free periods in place which will increase the net rental income to about GBP775,000 per annum in the short term, Palace said, equal to a yield of 6.9%. The company said it will instruct agents to let the empty space, in a move to increase the net income per annum and the net yield.
"We have been interested in Manchester for some time but up until now we were not able to secure a property which fulfilled our acquisitions criteria and rental return. We believe Boulton House will respond to our brand of asset management to maximise the value of this property. Initially this will be achieved by letting the vacant space whilst in the medium term there is considerable development potential," Chief Executive Neil Sinclair said in a statement.
Shares in Palace Capital were down 0.1% at 362.00 pence on Tuesday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Palace Capital (PCA)