Blackstone puts Sheffield's CityGate on the block

By Paul Norman - Wednesday, October 04, 2017 15:00

Blackstone is bringing to market CityGate, a multi-let office and long let hotel in Sheffield city centre, CoStar News can reveal.

Blackstone has appointed Knight Frank to seek in excess of £18m, reflecting a net initial yield of 6.88%.

CityGate was constructed in 2008 and comprises 58,488 sq ft of offices and an 126 bedroom hotel and circa 118 car parking spaces.

The office is multi-let to four tenants - ARM Ltd, Zoo Digital Group Plc and Hallam Medical Ltd - providing an AWULT of 7.6 years to expiries and 4.1 years to breaks. The rent passing is £878,301 pa, equating to an average of £14.79 per sq ft (on let space).

The hotel is let to Premier Inn Hotels with a parent company guarantee from Whitbread Group with 26.2 years unexpired. The total overall rent is £1,322,758 pa.

Asset management opportunities include letting the remaining vacant office space, re-gearing office leases and triggering rent reviews.

Blackstone is understood to have taken ownership of the asset via its acquistion of NAMA's €1.85bn Project Tower loan portfolio in 2014. The original €1.85bn Project Tower was comprised of three sub-pools:

•a €266m performing pool secured by a UK-led student accommodation portfolio, comprised of 11 assets in the UK and one each in Germany and Spain. The loans mature in March 2018;

•a €540m sub and performing pool secured by 23 UK investment properties, five UK development schemes and six German investment properties. The majority of the loans mature in March 2018, while a smaller pool of underwater UK-secured loans matured between March 2014 and March 2016;

•a €1.02bn sub and non-performing 21 investment properties, 67 residential and commercial developments and 27 landbanks throughout Ireland.

Jamie Campbell, CoStar Real Estate Analyst, said: "Investment volumes across Sheffield surged to around £114m in 2016 and momentum has continued this year, boosted by the recent sales of Hartshead House to UK Commercial Property Trust for £20.2m (a yield of 5%) and 1 Nunnery Square to Bracknell Forest Borough Council for £17.1m (a yield of 6.2%)."

CoStar's latest report on the Sheffield market can be viewed here.

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