UK Commercial Property Trust sells two development properties

Guernsey-based, UK-focused commercial property investment company UK Commercial Property Trust announced on Tuesday that is has completed the sale of Dolphin House, an office in Sunbury-on-Thames, having also completed the sale of 6 Arlington Street in London’s St James’s earlier in the month.

The FTSE 250 firm said the sales were completed in two separate transactions for a total consideration of £45.6m, which together represented an aggregate 14% premium to 31 March market value.

Dolphin House, which comprises 40,000 square feet of office space, has been sold to an unnamed UK residential development company.

It was initially acquired by UKCPT in 2006, with the company deploying a number of asset management initiatives achieving a planning consent for residential development through the use of a permitted development right.

In the other transaction, 6 Arlington Street - an 18,000 square feet freehold property opposite The Ritz, has been sold to an unnamed private purchaser.

The asset contains a high-end art gallery on the ground floor, offices on the first to fourth floors, and residential apartments on the fifth floor.

UKCPT said it is situated in a prominent position in the St James’s area and is fully income producing.

Since first acquiring the property in 2006, UKCPT said it has overseen a range of value-add initiatives to improve income, as well as obtaining planning permission to convert the site into residential use.

The sales, which were agreed with their respective purchasers prior to the result of the UK referendum on EU membership, leave the company with £70m of uncommitted cash.

Following the transactions, and based on the company’s 31 March valuations, net leverage is approximately 10.8% at a weighted average fixed cost of 2.89% per annum.

The weighted average term of the company’s borrowings is approximately 6.5 years, with the next refinancing due in April 2020.

“Having successfully implemented a series of asset management initiatives at both properties, the company took the decision to sell earlier in the year in order to maximise the capital return in this phase of both assets' economic cycle, and to create value for UKCPT shareholders,” said UKCPT fund manager Will Fulton.