Downing Developments has struck a £32.5m forward funding deal with London and Newcastle-based Merchant Place Corporate Finance for the first phase of its £200m Downing Plaza scheme in central Newcastle.
The deal represents a net initial yield of around 6.5%.
The 100,000 sq ft, nine-storey 1 Downing Plaza, which is being built on the site of the former Scottish & Newcastle Brewery, is pre-let to Newcastle University Business School.
The university will initially lease the building for 22 years from Merchant Place’s Commercial Property Distribution Fund.
Liverpool-based Downing is on site with the building, which is due to be completed in March 2011.
The overall Downing Plaza scheme will feature six buildings designed by Ian Simpson architects, which will form the gateway area to Newcastle council’s Science City masterplan.
Anna Cumming of Merchant Place commented: “The NUBS building will be a stunning addition to the city centre and was an excellent opportunity for our investors given the first class covenant offered by one of the country’s leading universities.”
Alex Munro, head of Knight Frank’s Leeds office, which advised Merchant Place, said: “This is one of the major deals in Newcastle this year.”
daniel.cunningham@estatesgazette.com
