Birmingham property company Real Estate Investors (REI) have bought £13m worth of commercial property in Birmingham, Derby and Leicester
– a deal representing an initial yield of 11.84% on its total current commercial property rents of £1.55m.
Gateway House, Birmingham, is a 27,071 sq ft commercial property, comprising retail and office space and generating £623,398 annual rental income. Southgate Retail Park, Derby, is an eight-unit 53,202 sq ft commercial property bringing in £412,074 per year. The third commercial property is Peat House, Leicester. Five floors of commercial property offices are spread over 43,437 sq ft, commanding £510,225 over the same period. Acting agents were commercial property experts Jones Lang LaSalle and Cheetham & Mortimer.
Chief Executive of REI, Paul Bassi, described the collection of commercial property as ‘prime, high-quality ex-institutional assets that provide good rental income and significant scope for asset management initiatives that will enhance capital values’.
The commercial property transactions take REI’s portfolio past the £75m mark, with an intention to hit £100m ‘within the next six to twelve months’. A reported total of £6.11m is now gathered through annual rent from the commercial property portfolio, up 50% since the start of 2011.
REI was formed in 2004 and has commercial property interests in Birmingham and throughout the UK.
Birmingham was highlighted by Nick Clegg in a recent speech as one of the UK regions requiring an accelerated ‘investment in infrastructure’. The Deputy Prime Minister announced in a speech given to the London School of Economics that up to forty development schemes, some in Birmingham, are to be granted high-priority status by the government and fast-tracked, with ‘no delays, no blockages’.
Christine Braddock, President of the Birmingham Chamber of Commerce pointed to ‘projects such as high speed rail’ and British Telecom’s stated intention to roll out £2.5bn of high-speed broadband in Birmingham as reasons to push ‘the Government to progress these and other major investment projects as quickly as possible’.
In March 2010 the then Transport Secretary Lord Adonis first announced plans for a super-fast rail connection between Birmingham and London. After the general election, Philip Hammond took over and reiterated the government’s commitment, asserting ‘the time for high speed rail in Britain has come’. The financial boost to commercial property in Birmingham if the project goes ahead is yet to be quantified; however, despite the estimated £32bn cost, Network Rail is on record as saying the plans ‘can drive economic growth and boost jobs’. The planned 250mph trains could connect Birmingham to Heathrow Airport and the Channel Tunnel in the south and Scotland and other cities in the north, possibly stimulating demand for commercial property along the routes.
Those considering investing in commercial property in Birminghamare advised to bear in mind the plans have yet to be given the green light. Pressure groups including the Taxpayers’ Alliance and the Campaign to Protect Rural England have already expressed opposition and a public consultation is still to come. For commercial property in Birmingham, just like with many rail journeys, delays may be expected.
