Palace Capital, the property investment company that focuses on commercial property outside London, has exchanged contracts to buy Bank House on King Street in the centre of Leeds from a major pension fund for £10m.
Bank House produces a gross rental income of £910,310 per annum and a net income of circa £864,000 per annum. This represents a net yield of 8.1 per cent after transaction costs.
Bank House, which was originally built in 1968 for the Bank of England, was recently listed as one of 14 post war buildings of historic interest.
The listing predominantly refers to the exterior, meaning interior reconfiguration could potentially boost rental income for the Company.
Bank House is situated in the heart of the traditional business district in Leeds and comprises a net floor area of 88,000 sq ft.
The building is currently let to the Bank of England, Axa Insurance and Walker Morris, the leading firm of solicitors in Leeds. The majority of the leases do not expire until 2019/20.
Neil Sinclair, chief executive of Palace Capital, commented: "I am delighted to announce this acquisition today. Leeds is one of the UK’s largest business centres outside London
"We have assessed a number of potential opportunities since the acquisition of PIH and, in the Board’s view, Bank House represents an opportunity to provide excellent returns for our shareholders.
"This is another example of how we are growing the Company through regional and secondary commercial property acquisitions.
"We are continuing to seek and evaluate additional acquisitions of property portfolios and appropriate single assets and are positive about the prospects of further enhancing shareholder value."