The top performing unlisted UK property fund of the past five years is preparing to sell its remaining assets.
UBS’s Central London Office Value Added fund has put its final four buildings on the market as a single portfolio. It is expected to attract bids in the region of £250m – a 4.8% yield.
Offers for individual assets may also be considered once a sales strategy is finalised.
CLOVA was launched in June 2011 with £110m of equity from predominantly UK and European institutions. It has returned 23.4% over its life to the end of December last year, putting it top of the AREF/IPD Property Funds Index for total returns over five years.
UBS had announced plans for a follow-on fund in spring 2014 but chose not to pursue the project following a period of rapidly rising values which made value-add strategies less attractive.
The bank has no plans to revive the follow-on fund but, given the strong performance of the first CLOVA vehicle, a successor is expected when market conditions are more suitable.
Five of the nine buildings originally purchased by the closed-ended fund had previously been sold. It now has until the end of 2016 to sell the remainder. The fund was given a one-year extension in August last year to complete various asset management strategies.
The total income generated by the remaining four assets (pictured) is £13m pa, reflecting an average rent of £44 per sq ft across the 290,000 sq ft of lettable area.
There are on average around 7.5 years to lease break and nine years to expiry.
A portfolio sale would offer an investor the opportunity to gain scale and exposure to a diverse range of London submarkets in a single transaction. There is also potential for further rental growth across the portfolio.
UBS has seen rents grow dramatically as it has filled each of the multilet offices and a small amount of vacancy remains.
Tudor Toone and Knight Frank are advising UBS.
All parties declined to comment.
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