A North-East based company has completed the sell-off of two of its subsidiaries in one of the region’s biggest property transactions.
The Adderstone Group has sold UK Ground Rent Estates Ltd and UK Ground Rent Estates (2) Ltd for £17m in a deal which included an ongoing management contract from the new, undisclosed buyer.
Tim Clark, a director of the Newcastle-based company, said it was still very much on the acquisition trail, but that an offer for two of the group’s businesses proved too good to resist.
“We are still acquisitive in this sector, but ground rent investments have become increasingly sought after by some major institutional investment houses,” said Clark. “Yields have contracted in recent years and we were made an offer for our more mature portfolios that was quite simply too good to refuse.”
The deal was supervised by Bond Dickinson. “We are delighted to see a local company successfully compete and demonstrate expertise in a sector dominated by London-based investment houses and more recently some of the big institutional players,” said John Ralph, a partner in the commercial law firm and head of its real estate sector. “We are pleased to have been able to support the growth of the group over the years.”
The £17m financial injection will do nothing to harm Adderstone’s finances in what is proving to be an impressive year for a company with an extensive portfolio of office, leisure and residential ventures. It also has a number of new developments underway.
Due for completion early next summer, one of its biggest projects is Union Square, a £17m student accommodation development in Newcastle’s Upper Ouseburn. The eight-storey, 228-bed apartment block will create 100 new jobs when it takes in its first students in September, 2014.
And only days after it’s £17m disposal — thought to be among one of the region’s biggest this year — Adderstone heard it had won an 18-month battle for permission to build premium offices next to the Tyne Bridge on Gateshead’s Quayside. The go-ahead for the two-storey development was finally granted on appeal by the Secretary of State after planning officers’ initial recommendations for approval were rejected by councillors.
The 259sq metre scheme will provide high specification office and other commercial space on a prestige site with views over Gateshead and Newcastle’s regenerated quaysides. Julie Booth is director of Intersect Architects. “Our aim throughout the design process has been to integrate the new building into its existing setting and provide a distinctive, contemporary structure in this prominent location,” she said.
Describing the project as “highly significant”, Adderstone’s managing director, Paul Tognarelli, said: “We spotted huge potential in the market and created the ability to develop that potential very effectively. Proceeds from this deal will be invested into our development pipeline bringing about further regeneration for the region. We have,” he added, “definitely sensed an upturn in the local economy.”
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Great local company, nice to hear a success story in the industry for a change! Well done.