Carlyle Group is preparing to exit another major boom-time regional office investment that struggled to let in the downturn, as it seeks to capitalise on demand that has pushed yields lower.
The private equity group has appointed GVA and CBRE to advise on the sale of numbers Three and Four Piccadilly Place in Manchester, seeking bids of £115m, a 5.75% yield.
The sale comes after Carlyle’s disposal of Colmore Plaza in Birmingham earlier this year.
The decision to sell Colmore Plaza followed Legal & General’s purchase of 1 Colmore Square in Birmingham for £87m – a 4% yield and a record for the current cycle that reflects the depth of demand for regional office space.
The sharp yield gave Carlyle the confidence that it could exit its investment at a price broadly in line with its purchase cost, which had not been possible for the preceding seven years since the onset of the downturn.
Three and Four Piccadilly Place comprise 300,000 sq ft of offices and 25,000 sq ft of retail and leisure and form part of the 675,000 sq ft Piccadilly Place campus.
Carlyle forward funded the buildings with Argent in 2007 for around £100m, at the peak of the previous market cycle.
At the time the 190,000 sq ft Three Piccadilly Place was 25% let and the 110,000 sq ft Four Piccadilly Place was developed speculatively.
But the scheme struggled to let following the financial crisis in 2008 as corporate demand for new office space evaporated.
It eventually secured an 80,000 sq ft letting to Barclays Bank in 2013, which at the time was the largest Manchester leasing deal for three years.
Three Piccadilly Place is now fully let to tenants including NuGeneration, Weightmans, Arup, EC Harris and the NHS Strategic Health Authority, while Four Piccadilly Place has around 24,000 sq ft of vacant space following the Barclays letting.
Colmore Plaza in Birmingham was another major speculative office development that Carlyle forward purchased close to the peak of the cycle.
It bought the 310,000 sq ft office block for £150m in 2007, unfinished and unlet.
The building, which is now two-thirds let, was sold to Peter Ferrari’s Ashby Capital in August this year for around £140m.
chris.berkin@estatesgazette.com
alex.peace@estatesgazette.com
