Workspace spends £31m on two central London properties

21st Jan 2015 07:55

Workspace Group has put its recently raised funds to quick use with the acquisition of two London buildings that it said were in areas of strong demand and will enhance earnings.The office space provider shelled out £25.3m for Edinburgh House, near the Oval cricket ground in Kennington, and £6.1m on Peer House on Gray's Inn Road.Chief executive Jamie Hopkins said: "I am delighted to announce these two purchases which extend our already strong presence on London's South Bank and in Midtown."Both are located in exciting areas very well known to us, which are undergoing substantial change and regeneration, and where we are seeing strong customer demand."These are the first acquisitions since our successful equity placing in November 2014 and demonstrate our ability to invest in quality, earnings enhancing assets to generate value for our shareholders."Edinburgh House has been acquired at a net initial yield of 5.2% with a capital value of £370 per square foot (psf) and is currently let to the Metropolitan Police Authority at a rate of £22 psf. The building is due a tenant break in 2020 although the lease runs until 2030.Analysts at Liberum noted that with a light refurbishment "there is no reason why it shouldn't get significantly higher rents".Situated next-door to an existing Workspace property, Peer House was acquired at a net initial yield of 3.3% with a capital value of £605 psf. The property is currently let to five tenants on low rents of £21 psf with an average unexpired lease term of 2.7 years.Liberum added: "These two deals show that even though the market is well bid the company is still finding assets which give them optionality going forward and utilising the funds raised in the November placing."