Sterling to grow after £18m deal

The offices, which are occupied by the NHS, Barratt Homes, Henderson Insurance Brokers and Hermes, are part of Capitol Park, near the M62 on the outskirts of Leeds.

The buildings, which total 95,913 sq ft, were bought by London-based property investment company Squarestone.

The combined rent roll is more than £1.7m a year, reflecting a net initial yield of 8.9 per cent.

Sterling Capitol owns land to the north of Capitol Park and preparation is underway to bring forward plans for phase two.

It is understood the second phase will include a number of large industrial units, subject to planning.

The deal follows the sale of a number of Sterling Capitol’s assets in recent years which will help to fund its future development plans.

Mike Heydecke, director of Sterling Capitol, said: “We have some extremely exciting plans agreed, which will create much-needed business space and jobs.

“Capitol Park itself is a tremendous success story and recent lettings and deals have taken it to the 1,600 jobs target for phase one. It is one of the brightest stars of the Yorkshire out-of-town business park sector and continues to attract first-class tenants.”

Hugo Denée, head of acquisitions at Squarestone, added: “We are very pleased with the acquisition which satisfies our business model in acquiring good quality real estate around the UK. The park offers good quality income with future re-gear opportunities and a real value add potential that the additional development site will bring.”

The deal was brokered by the Leeds office of Knight Frank, which represented Sterling Capitol. Squarestone was advised by Allsop. DWF and Addleshaw Goddard provided legal advice.

The sale comes as new figures reveal investment in commercial property across Yorkshire reached its highest level since Q3 2015 in the three months to July 2017.

Graham Foxton, investment partner at Knight Frank, said: “This deal graphically illustrates that the Yorkshire region continues to be popular with investors and occupiers and underlines that well-located buildings on strong leases will always prove attractive.”

The research by property agent Lambert Smith Hampton (LSH) reveals that investment in commercial property across the region reached £396m in the second quarter of 2017, up 25 per cent on the first quarter and seven per cent ahead of the five-year average.

Yorkshire was also one of the top three best performing regions across the UK when compared to the same period in 2016, with investment volumes up 119 per cent.

The student housing market was a catalyst for the increased investment, with UPP Holdings’ purchase of West Campus Residences in Hull for £155m the biggest single deal outside of London during the quarter.

Excluding the West Campus Residences deal, overseas buyers dominated activity, investing £64m in assets such as Trident Business Park in Huddersfield and a Matalan store on Mayo Avenue in Bradford.

Bill Lynn, director of capital markets for LSH in Yorkshire, said: “Q2 was a stellar quarter for Yorkshire and the Humber’s commercial property investment market with some extremely high value assets changing hands.”