Aviva Investors is close to agreeing a £100m deal to fund English Cities Fund’s Two New Bailey office development in Salford, Greater Manchester. The price reflects a net initial yield of 3.25%.
The 190,000 sq ft office building is backed by Salford City Council, which has agreed a 25-year lease, paying around £17 per sq ft, to help bring forward the development and support future jobs creation. It does not intend to occupy the scheme and will sublease offices to future occupiers.
ECf, a joint venture between Muse Developments, Legal & General and the Homes and Communities Agency, is developing the building, which forms part of a £650m plan to regenerate 50 acres around Salford Central station.
The joint venture has recently completed One New Bailey, a 125,000 sq ft office scheme where law firm Freshfields Bruckhaus Deringer is setting up its new Manchester office.
The deal is in line with Aviva’s stated strategy to shed property assets outside of the major UK towns and cities and increase average asset size in big cities.
The fund appears to be particularly focused on Manchester, with its head of research Chris Urwin due to outline Aviva’s Manchester strategy to a property professionals in September.
This week, it was announced that Aviva Investors has also acquired 55 Spring Gardens, a 55,700 sq ft office building in Manchester’s central business district, from CBRE UK Property PAIF – a fund managed by CBRE Global Investors.
Aviva is currently looking to dispose £400m of non-core assets in the UK.
JLL and Cushman & Wakefield is advising ECf; King Street Commercial is representing Aviva Investors.
All parties declined to comment.
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