Palace Capital, the property investment company that focuses on commercial property outside London, has acquired 249 Midsummer Boulevard, Milton Keynes for a consideration of £7.2 million in an off market transaction. The consideration was satisfied from the Company's existing cash resources.
The office building is on a large site a few minutes' walk from Milton Keynes Central Station. It was built in 1990 and comprises 49,000 sq ft of net lettable space. The building is virtually fully let with a Weighted Average Unexpired Lease Term of 2.45 years to break or expiry. It is currently producing a net income of £550,000 per annum, exclusive reflecting a Net Initial Yield on acquisition cost of 7.2%. Tenants include DHL and Crawford & Co Adjusters (UK), part of one of the largest providers of claims management solutions in the world.
Milton Keynes is one of the fastest growing towns in the UK with a current population of 260,000. With the building let at relatively modest rents, the Company sees considerable opportunity for growth with medium term development potential.
Savills advised the vendors and Avison Young represented Palace Capital.
Neil Sinclair, Chief Executive of Palace Capital, commented:
"This is our first acquisition since last August. Although our cash resources are earning a minimal return, we only buy where we find value. We are delighted with this purchase because Milton Keynes is one of our favoured locations and we have other interests there. The net income will add directly to our net profit, which will increase our earnings per share, and we think there is excellent potential for rental growth in the short term.
"We continue to investigate further suitable acquisitions which fit our criteria and where we can use our cash resources to increase our profitability."