German investors are showing more interest in regional capitals in the UK as a way of diversifying their London-dominated holdings. Glasgow was top of the list in November. Union Investment acquired the 6,308 m2 Equinox Building in Glasgow. The price for the fully let Grade-A building was kept confidential but it is believed to have been in the region of £28.3 mln (EUR 33 mln).
Around the same time SEB Europe REI revealed it had added an office building at 110 St. Vincent Street in Glasgow to its portfolio for an undisclosed price. The vendor was the British company Scarborough Group. The property is leased to the Bank of Scotland.
A month earlier Henderson Global Investors acquired a 4,000-m2 retail-dominated mixed-use site on Buchanan Street in Glasgow. The investment volume of EUR 41 mln, reflected a net initial yield of 5.4%. HGI carried out the transaction on behalf of its RZVK-Immo-Fonds, for its German joint venture Warburg - Henderson.
Warburg-Henderson is actively looking for further similar retail opportunities in major UK centres.
Dr. Karl-Joseph Hermanns-Engel, of Union Investment, says that top regional cities provide the opportunity to diversify the fund manager’s UK portfolio ‘without compromising on building quality, tenant strength and lease lengths.' He said this was particularly the case in the UK.
'The top 5 regional cities - Glasgow, Edinburgh, Leeds, Manchester and Birmingham - offer today attractive opportunities to acquire long let, triple net lease with the famous upward-only rental review at yields that are highly attractive when compared to properties in central London.'
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