Warner and RBoS Form New Office Fund

LONDON-Warner Estate and the Royal Bank of Scotland have followed the launch of their Agora shopping centre fund with a second joint venture specializing in offices. This time Warner has injected six provincial office buildings worth £109 million ($175 million) into an office fund, to be called the Regional Fund.

The fund will aim to produce high returns from large office buildings in the UK’s provincial office centres. The initial six properties are the 94,683-sf Apex 123 in Edinburgh; the 86,541-sf Sapphire Court in Solihull near Birmingham; the 153,396-sf Lever House and Surrey Court in Kingston, South-West London; 88,084 sf in Bath Street, Glasgow; the 80,187-sf Holland House in Bournemouth and the 78,738-sf Yorkshire House in Leeds. This portfolio has a current rent roll of £8.49 million showing an initial yield of 7.27% with a reversionary yield of 7.54%.

Warner Estate will be responsible for property asset management for the fund. Chairman Philip Warner said: “This is a further significant move for Warner Estate and we are delighted to be working with RBS. We both believe that there are resilient strengths in the regional office sector and our complementary style, strategy and investment criteria are well illustrated in this purchase.

“Research has indicated that many of the known regional office markets are not subjected to major fluctuations in value. In the big eight regional centres, tenants tend to make their choice of location and then remain. By creating a portfolio, which spans the breadth of the UK, we have created a growth vehicle, which has defensive characteristics and the potential to continue to perform well in a slower market.”