London property investor acquires “exciting” Maidenhead office for £10.25m

Palace Capital (LSE: PCA) announces that it has acquired 22 Market Street, an office building in the centre of Maidenhead, Berkshire for £10.25m reflecting a net initial yield of 6.83 per cent.

The transaction has been funded using both the existing NatWest revolving credit facility and proceeds from the Company’s £30m disposal strategy, which aims to generate capital from “mature or non-core properties for redeployment into opportunities with more attractive returns profiles”.

Following this acquisition, and combined with the additional £1.3m of annual income generated since the start of the financial year through active asset management, including lease renewals, rent reviews and new lettings, the new income added to the portfolio rent roll now exceeds in excess of £1m per annum, that was lost through the disposal programme.

The newly acquired property which has an Energy Performance Certificate rating of B has recently been comprehensively refurbished and comprises 21,852 sq ft across three floors.

It is fully let on a 10 year lease, from August 2021 with a tenant break option at the end of the fifth year, to Techtronic Industries EMEA Ltd, a subsidiary of Hong Kong listed Techtronic Industries which has a market capitalisation of £26bn, delivering an annual rent of £718,475.

Two small retail units on the ground floor bring the total net income from the asset to £747,374 per annum.

Neil Sinclair, chief executive of Palace Capital, commented: “The Thames Valley is home to a host of global, blue chip companies and is a high demand location because of its accessibility; but despite this, in common with the trend we are seeing across the UK, office space availability has reduced significantly over recent years.

“Maidenhead is on track to benefit not only from the opening of the Elizabeth Line in 2022, with fast access to London Heathrow, the City, Canary Wharf & West End, but also the nearby Nicholson Quarter mixed use development, where construction is expected to commence in 2023.

“We are highly selective when identifying potential opportunities, particularly in this market where value is very difficult to access, and we are therefore very pleased to have been able to embark on recycling the disposal proceeds with this exciting investment.”

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