Palace Capital has exchanged contracts to buy Bank House on King Street in the centre of Leeds from a major pension fund for a cash consideration of £10 million. The consideration will be satisfied from Palace Capital’s existing cash resources.

Bank House produces a gross rental income of £910,310 per annum and a net income of circa £864,000 per annum. This represents a net yield of 8.1 per cent after transaction costs.

Bank House was originally built in 1968 for the Bank of England, who still occupy the lower two floors. It was recently listed as one of 14 post war buildings of historic interest. The listing predominantly refers to the exterior, meaning interior reconfiguration could potentially boost rental income for the Company.

Bank House is situated in the heart of the traditional business district in Leeds and comprises a net floor area of 88,000 sq ft. It is let to the Bank of England, Axa Insurance and Walker Morris. The majority of the leases do not expire until 2019/20.

There is currently 8,800 sq ft of vacant space. The Company will be taking active steps to effect early lettings to take advantage of a resurgent Leeds office market. The Directors believe that through active management the net yield of Bank House could, over time, increase to around 10 per cent. As the building is listed there is no liability for empty rates.

In August 2014, Palace Capital raised £20 million with investors, not only to facilitate the acquisition of Property Investment Holdings (PIH) but also to take advantage of ‘opportunistic acquisitions’.

Neil Sinclair, Chief Executive of Palace Capital, commented:

“I am delighted to announce this acquisition today. Leeds is one of the UK’s largest business centres outside London

“We have assessed a number of potential opportunities since the acquisition of PIH and, in the Board’s view, Bank House represents an opportunity to provide excellent returns for our shareholders.

“This is another example of how we are growing the Company through regional and secondary commercial property acquisitions. We are continuing to seek and evaluate additional acquisitions of property portfolios and appropriate single assets and are positive about the prospects of further enhancing shareholder value.”

By | 2018-03-30T07:44:10+00:00 March 9th, 2015|News|0 Comments