Legal & General is in talks to forward purchase the new Bristol headquarters of HMRC for close to £70m.
The prospective deal for Salmon Harvester Properties’ 3 Glass Wharf on Avon Street would be the first purchase of a regional Government Property Unit hub.
The GPU is closing in on around 7.4m sq ft across 13 cities in England and the leasing deals are likely to provoke a flurry of large-scale investment deals.
The price reflects a yield of between 4.5% and 5%. HMRC has agreed a long lease of more than 20 years at a rent of close to £28 per sq ft on the 114,830 sq ft building. The pricing of the deal will be a marker for any future purchases of GPU hubs.
L&G is looking to buy the asset for its long-income fund. Pension fund investors are under pressure to find assets with income profiles that match their annuity-style liabilities as their policy holders’ life expectancy increases. Additionally, the low returns on gilts means that even the keenest yields available in the property market look relatively attractive.
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