Hillview strikes UK regional office deals for £300m value add fund

Regional UK specialist Hillview Real Estate has acquired two out-of-town office investments for its value add fund.

Experts say news of the transaction could encourage similar deals among motivated sellers that contemplated offloading similar real estate last year but were hampered partly by Brexit hesitancy and by a mix of other factors such as bid/ask spreads being too great.

Hillview Real Estate has acquired the office properties in Watford and Birmingham for £18.25 mln (€21.1 mln), reflecting a blended net initial yield of 7.7%, for Hillview Partners Property Fund III, its £300 mln value-add regional real estate fund. The seller declined to be named.

In its second and third investments for the new fund, Hillview Real Estate has bought Belfry Business Park in Watford and the 1320 building at Birmingham Business Park.

Belfry Business Park comprises the freehold interest in five buildings on Colonial Way, a major industrial and office location on the edge of Watford.

One of the five buildings has been sold on a 999-year lease to Majestic Wines. The remaining buildings have a total area of 43,245 ft 2 and are let to six tenants, including HSBC Business & Corporate Banking, Handelsbanken and RX Systems. There is a 5,285 ft 2 unit which is vacant. The weighted average unexpired lease term is 3.3 years to breaks and 7.4 years to expiries.

Watford has attracted a number of major occupiers recently, including PwC, TJX and Asos and it was recently ranked fourth in a Knight Frank survey of locations most likely to benefit from businesses moving to a hub and spoke occupation model.

1320 Birmingham Business Park comprises a 26,374 ft 2 building fully let to two tenants, BCA Logistics and Vector GB. The weighted average unexpired lease term is 5.8 years.

1320 Birmingham Business Park fits well with the first acquisition by Hillview Partners Property Fund III, the company said, which was also on Birmingham Business Park. Kings Court (2620 – 2650) comprises a development of three adjacent buildings providing high-quality office accommodation and was purchased from Catalyst Capital for £9.7 mln.

Birmingham Business Park, located to the east of Birmingham city centre by the M42 in Solihull, is one of the Midlands’ most established commercial hubs, comprising 1.84 million sq ft over 148 acres. The park is due to benefit from its proximity to the planned HS2 interchange station at the nearby Birmingham International Airport.

Hillview Real Estate was advised by ADS Real Estate, Addleshaw Goddard, Ogiers and Powell Williams.

Nadav Livni, managing director of Hillview Group and fund manager of Hillview Real Estate, said: ‘These two investments are excellent acquisitions for our new fund. Both provide stable income and opportunities for our team to significantly add value from enhancing amenities, lease events, refurbishment of units and regearing leases. They are perfect office properties in the post-Covid environment, offering tenants in high-growth sectors convenient locations, occupational flexibility, local amenities and the ability to drive or cycle to work.’

Hillview announced the launch of Hillview Partners Property Fund III in July 2020. The value-add fund will have at least £150 mln of equity commitments and, using leverage, aims to deliver mid-teen total returns to investors, by investing £300 mln in well-located, multi-tenanted, institutional-quality properties in key cities and regions with favourable supply-demand dynamics.

Individual investments are expected to range between £10 mln and £25 mln and provide significant scope for value enhancement through active asset management, including repositioning of properties and restructuring of leases.


Latest news

Best read stories