CLS Holdings (CLS) has sold a portfolio of 19 regional offices in the UK for £65.0 million to Elite Capital Partners, a Singaporean investment firm.
The offices are located across the UK outside of the South East and, following major lease re-gears last year, have less active asset management potential.
”The sale of the portfolio is in line with our strategy of actively recycling our capital and focusing the UK portfolio on London and the South East. Following the completion of this transaction, CLS will hold only two assets in the UK located outside of the South East,” said in a statement.
The sales of 17 of the 19 offices, which are held freehold or heritable title, have simultaneously exchanged and completed for £62.1 million. The sales for £2.9 million of the remaining two assets, which are held long leasehold, have exchanged and are expected to complete in Q1 2020, subject to the consent of the freeholder. All the offices were unencumbered at the point of sale.
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The portfolio comprises 618,223 sq. ft and is 97.5% let on FRI leases to various UK Government bodies with a WAULT of 4.1 years to breaks. The portfolio has net rent of £6.5 million per annum at an average of £10.62 per sq. ft. The portfolio was valued at £66.4 million as at 30 June 2019 and the sale proceeds represent a small loss of £1.4 million, a discount of 2.1%. However, CLS has in addition received over £3.2 million in rent from this portfolio since 30 June 2019.
“This transaction is a significant step in implementing our strategy of focusing our UK portfolio on London and the South East office markets, a region in which we remain confident of the long-term prospects. We continue to see significant opportunities for acquisitions across our core markets and this transaction will allow us to recycle capital to capitalise on those opportunities,” said Fredrik Widlund, Chief Executive Officer of CLS.