L&G in record Aberdeen Office deal.
04 November 2014
Legal & General Property (LGP), on behalf of its annuity fund, announces that it has purchased and forward funded the development of a 335,000 sq ft Headquarters office for Aker Solutions in Aberdeen for a total consideration of over £127 million, equating to a 5.75% net initial yield.
Representing the largest single office deal ever to take place in Aberdeen, the property forms the first phase of Aberdeen International Business Park which is being developed by the Abstract Group on behalf of Norwegian Investment Company, Aker ASA.
With works nearly complete, the first phase comprises three interlinked buildings totalling 336,369 sq ft (net) of Grade A office accommodation, alongside 1,197 car parking spaces. Taking the property on a 20-year, lease term, with options to extend the leases over three further five year periods, Aker is due to take occupation of the asset in February 2015. Paying an annual rent of just under £7.74 million, with a headline rent equating to £23.75 per sq ft and RPI linked rent reviews, the letting to Aker is believed to be the largest ever single office letting to take place in Scotland.
With consent for total of around 1 million sq ft of accommodation, further phases are expected to include a series of office buildings and at least one hotel. The property is located immediately opposite the entrance to Aberdeen Airport on Dyce Drive, approximately six miles to the north west of Aberdeen City Centre. The strategic importance of the Dyce Airport location is further highlighted by the start of works to the long awaited Aberdeen Western Periphery Route (AWPR) and the associated Link Road between the AWPR and the Airport.
Aker Solutions is one of the largest employers in Aberdeen, with operations spread across a number of sites in the City. When fully occupied, there will be around 2,400 employees in this new complex. With a tight supply of skilled employees in the Aberdeen market, the first phase of the development is focused around providing a full-offer environment for employees, to include a good range of catering facilities, as well as a gym and sports hall, two squash courts, a medical centre, retail and a nursery / crèche. Also recognising the growth of internet shopping, the building offers dried, chilled and freezer rooms for delivery of groceries to the workplace.
Designed to achieve a BREEAM Excellent rating and targeting an EPC Rating of B, the property comprises a number of high sustainability credentials.
Commenting on the sale, Mark Glatman, Chief Executive of the Abstract Group, said: “This purchase by Legal & General is a huge endorsement of the Aberdeen market and this development in particular. When completed, this building will offer the best quality and most environmentally friendly accommodation in Aberdeen.”
Adam Kerr, Head of long income transactions at Legal & General Property, commented: “Abstract has a reputation for delivering buildings of high specification, with excellent green credentials, to an exceptional standard of finish and this development project goes above and beyond this. Investing for the long term, in order to provide a secure, long term income to match our annuity liabilities, the quality and enduring appeal of this building as a key business location is vital, as is the strength of the covenant backing it.”
Laura Mason, Director of Direct Investments at Legal & General Capital, said: “This investment demonstrates our continued commitment to move into direct investments in the UK using our internal capital sources to provide long term financing to many different sectors.”
Dowley Turner Real Estate and Cushman & Wakefield acted for Legal & General. Abstract was unrepresented.
Notes to editors
Abstract is developing the 40 acre Aberdeen International Business Park on behalf of Norwegian Investment Company Aker ASA.
The site was acquired in early 2013. The site is immediately adjacent to Aberdeen International Airport and offers multi-national companies a combination of the best buildings and facilities in the Aberdeen market as well as the closest proximity to the Airport for easy national and international travel.
The Abstract Group is one of the most active office developers in the UK and has the largest office development portfolio outside of Central London. Abstract are currently developing 170,000 sq ft at St. Vincent Plaza in Glasgow which is the most competitively priced new office building in any city centre in the UK. Abstract are also developing 110,000 sq ft close to Gatwick Airport, again offering the most competitive new office space in the South East of England. Besides the Aberdeen project it is also working with the Carlyle Group on the re-development of the former Colgate factory, now named Soapworks in Salford.
For further information, please contact:
Abstract Group of Companies
+44 (0) 207 747 8272
Legal & General Property
Legal & General Property (LGP) is a wholly-owned subsidiary of Legal & General Investment Management (LGIM), one of Europe’s largest institutional asset managers and a major global investor. LGIM manages approximately £465bn in assets on behalf of over 3,100 clients (30 June 2014) and provides products and solutions spanning all asset classes. LGP is the third largest institutional property fund manager in the UK, managing or co-managing 17 separate funds or vehicles including three segregated mandates with an aggregate asset value of £14.5bn as at 30 October 2014. These funds include:
Life Fund; Linked Pensions; Linked Life; Managed Fund; Legal & General UK Property Fund; UK Property Income Fund I; UK Property Income Fund II; LPI Income Property Fund and the Hybrid Property Fund
Specialist Pooled Funds
The Leisure Fund Limited Partnership; Industrial Property Investment Fund; Arlington Business Parks Partnership; and the English Cities Fund
Single Asset Vehicles
Bracknell Regeneration Partnership; Central Saint Giles Partnership.
LGP’s UK-focused fund management platform has built and retained a strong track record of out-performance. Owing to its size, diversity and penetration, it benefits from best-in-class banking and property contacts which, along with its wealth of in-house skill and expertise, have enabled it to continue to attract and secure high quality market opportunities.
Taking a client-centric approach, the business places the highest priority upon integrity and transparency, leveraging the significant resources provided by the wider LGIM platform. Protecting the medium to long term value of its portfolio, as a leader in sustainability, green principles are embedded into every property and investment decision.
Sector specialists cover each sphere of the market and are supported by LGP’s market-leading research capability. In particular, the Company has a major development platform, responsible for delivering community-focused projects ranging from West End landmark buildings to significant town-centre retail and leisure regeneration schemes.
Forming part of the Group’s larger UK housing and infrastructure investment strategy, LGP also continues to participate in a growing range of supply side housing activities, including financing affordable homes, the house building sector, urban regeneration, student accommodation and care homes.