London's Lothbury disposes of Glasgow asset for £31m

Lothbury Investment Management, on behalf of Lothbury Property Trust, has disposed of its retail and office holding at 78-90 Buchanan Street and 9-17 Exchange Place, in Glasgow, for £31m.

The purchaser is Pontegadea, with the sale representing an initial yield of 3.99 per cent. The 35,000 sq ft property comprises retail, leisure and offices and produces annual rental income of £1.3m.

Buchanan Street, known as Glasgow’s ‘Style Mile’, is home to many international retailers and is the second busiest retailing street in the UK, after London’s Oxford Street.

At the end of 2017, Lothbury agreed an extension of Vodafone’s lease on their prominent corner unit by a further 10 years from December 2019 at £320 per sq ft ITZA - a 23 per cent uplift and a new record rental for Buchanan Street.

Mike Toft, enior fund manager and executive director of Lothbury Investment Management, said: “Buchanan Street has been one of Lothbury Property Trust’s top performing assets since we purchased it in 2013, as a result of repositioning the property after a number of asset management initiatives.

“The building was purchased from out of administration for £17.42m. It was a key purchase as it fitted our strategy of investing in prime locations with excellent growth potential.

“Indeed, rental growth has remained good despite the downturn in retail, with rents rising from £260 to £320 per sq ft ITZA in just three years.

“However, with the challenges now facing the retail sector, this was a good opportunity to sell and reinvest in other areas, particularly the industrial and alternative sectors.”

The building is currently fully occupied and let to Vodafone, Lush and Starbucks on the ground floor. The first, second and third floors, comprising 16,644 sq ft of Grade A office space, are occupied by Building Design Partnerships, BNP Paribas Real Estate and Drum Property Group on.

The weighted average lease term is 8.8 years.   CBRE acted for Lothbury; Sheridan Property Consultants acted for Pontegadea.