The Crown Estate is one of the UK’s largest and most influential commercial property players, with assets throughout the country combining into a portfolio worth over £2 billion.
However, the firm recently made the decision to rebalance this portfolio as a means of capitalising upon the strong asset management opportunities currently flooding the market – a decision which this week led to the sale of St James’s House in Manchester to the Tesco Pension Fund for an undisclosed sum.
Although the 66,000 square foot office block and ground floor row of retail units have been under the ownership of the Crown Estate since 1995, the firm’s heightening desire to add larger retail developments to its portfolio meant that a sale was most certainly on the cards this year. In part, this is due to the long term goals of the Crown Estate, but also because of the growing demand for good quality office space in central Manchester by international funds and developers.
Head of the Crown Estate’s regional portfolio, Hannah Milne, believes that the sale of St James’s House represents an excellent deal under current market conditions.
She says; “The sale represents a good example of our wider investment strategy, which involves generating working capital for reinvestment across our core sectors by divesting from non-core assets.
“Regionally, our focus continues to be on dominant retail and leisure schemes, which includes our portfolio of prime shopping parks, as well as our interests in shopping centres in Exeter, Oxford and Worcester.”
Another reason for the timing of the sale relates to the way in which it funds its investments, as it is not eligible to borrow money and so relies upon entering into strategic joint ventures or recycling all capital generated by the sale of non-core assets. As the sectors deemed “core” include popular regional retail schemes, offshore wind opportunities, rural land and investment opportunities in the West End of central London, the proceeds from this sale will undoubtedly help in funding further acquisitions in the future.
Do you think the sale of St James’s House was well timed, or would the Crown Estate have benefited more from a sale further down the line?
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