Palace Capital has bought a £20m portfolio of mixed assets in Newcastle.
The company has bought the assets from SM Newcastle, which owns the freeholds of 1, 2 & 3 St James Gate, as well as a Jury’s Inn in Newcastle city centre.
The acquisition has been funded by a new loan of £11.5m from Santander, with the balance being funded from the company’s own cash resources.
The properties are situated close to Newcastle Station and were originally developed by McAleer & Rushe.
The 274-bedroom Jury’s Inn hotel, 1 St James Gate (comprising 61,000 sq ft of office space) and the residential element of 3 St James Gate (145 flats) have previously been sold on 999-year leases.
2 St James Gate is a fully multi-let office building of 82,500 sq ft, erected in 2006 and producing a net income of £1.605m pa. Tenants include the National Lottery Charities Board, Eldon Insurance Services, Serco and UBS. The small retail element of 3 St James Gate, comprising 16,500 sq ft, produces a net income of £160,000 pa.
The total net income from the properties is £1.765m pa which, after costs, produces a net initial yield of 8.6%.
Knight Frank acted for Palace Capital; Steerforth Partners & Sanderson Weatherall acted for the vendors.
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