UKCPT adds £20m Grade A Sheffield office to portfolio

UK Commercial Property Trust confirmed on Thursday that it had acquired a single let, Grade A office building in Sheffield, from Ediston Property Investment Company, for £20.17m, reflecting a net initial yield of 5%.

The FTSE 250 firm said the asset is let to Capita Business Services, which is part of Capita, on a lease with annual indexed linked rent increases and 22 years to expiry.

Delivering a current rent of £1,076,715 per annum, the transaction further increased UKCPT's exposure to long term, secure and growing income streams.

Together with the purchase in February of a pre-let distribution warehouse development in Burton upon Trent, let on a 15 year lease with RPI inflation linked rent increases, for £22.2m reflecting a yield on capital of 5.8% when completed in July 2017, UKCPT’s board said the two acquisitions, at a combined £42.4m, delivered a blended yield of 5.4%.

Hartshead House, at 2 Cutlers Gate in Sheffield's city centre, was described by the board as a “prominent building”, comprising 61,638 sq ft of Grade A office space, which fit the company's strategy of acquiring good quality assets let to strong tenant covenants.

The current availability of Grade A office space in Sheffield was limited, with a projection of less than five months' supply in the market.

“We have undertaken a significant amount of asset management activity during the course of 2017 and our strong focus throughout has been on further improving the income profile of our portfolio,” said Will Fulton, fund manager at Standard Life, which advised the acquisition.

“To this end, the new asset in Sheffield meets our current preference for long term, secure and growing rents, while at the same time further enhancing our dividend cover.”