Hillview Real Estate acquires two out-of-town office investments for new £300 million UK regional office fund1 March 2021
Hillview Real Estate, the UK regional office investor, has acquired two out-of-town office investments in Watford and Birmingham for £18.25 million, reflecting a blended net initial yield of 7.7%, for Hillview Partners Property Fund III, its £300 million value-add regional real estate fund.
In its second and third investments for the new fund, Hillview Real Estate has bought Belfry Business Park in Watford and the 1320 building at Birmingham Business Park.
Belfry Business Park comprises the freehold interest in five buildings on Colonial Way, a major industrial and office location on the edge of Watford.
One of the five buildings has been sold on a 999-year lease to Majestic Wines. The remaining buildings have a total area of 43,245 sq ft and are let to six tenants, including HSBC Business & Corporate Banking, Handelsbanken and RX Systems. There is a 5,285 sq ft unit which is vacant. The weighted average unexpired lease term is 3.3 years to breaks and 7.4 years to expiries.
Watford has attracted a number of major occupiers recently, including PwC, TJX and Asos and it was recently ranked fourth in a Knight Frank survey of locations most likely to benefit from businesses moving to a hub and spoke occupation model.
1320 Birmingham Business Park comprises a 26,374 sq ft building fully let to two tenants, BCA Logistics and Vector GB. The weighted average unexpired lease term is 5.8 years.
1320 Birmingham Business Park fits well with the first acquisition by Hillview Partners Property Fund III, which was also on Birmingham Business Park. Kings Court (2620 – 2650) comprises a development of three adjacent buildings providing high-quality office accommodation and was purchased from Catalyst Capital for £9.7 million.
Birmingham Business Park, located by the M42 in Solihull, is one of the Midlands’ most established commercial hubs, comprising 1.84 million sq ft over 148 acres. The park is due to benefit from its proximity to the planned HS2 interchange station at the nearby Birmingham International Airport.
Hillview Real Estate was advised by ADS Real Estate, Addleshaw Goddard, Ogiers and Powell Williams.
Nadav Livni, managing director of Hillview Group and fund manager of Hillview Real Estate, said: “These two investments are excellent acquisitions for our new fund. Both provide stable income and opportunities for our team to significantly add value from enhancing amenities, lease events, refurbishment of units and regearing leases. They are perfect office properties in the post-Covid environment, offering tenants in high-growth sectors convenient locations, occupational flexibility, local amenities and the ability to drive or cycle to work”.
Hillview announced the launch of Hillview Partners Property Fund III in July 2020. The value-add fund will have at least £150 million of equity commitments and, using leverage, aims to deliver mid-teen total returns to investors, by investing £300 million in well-located, multi-tenanted, institutional-quality properties in key cities and regions with favourable supply-demand dynamics. Individual investments are expected to range between £10 million and £25 million and provide significant scope for value enhancement through active asset management, including repositioning of properties and restructuring of leases.
Hillview Partners Property Fund III continues the value-add strategy which Hillview Real Estate has successfully executed by transacting more than 1.3 million sq ft across 13 regional cities and follows the investment programme for Hillview Partners Property Fund II.