Schroder Real Estate Investment Trust: Acquisition of Manchester city centre mixed-use office and retail asset for £14.7 million

Schroder Real Estate Investment Trust Limited (“SREIT” / the “Company” / “Group”), the actively managed UK-focused REIT, announces the acquisition of St. Ann’s House in Manchester, for £14.7 million, reflecting a net initial yield of 7.8%, a reversionary yield of 9.1% and a low average capital value of £283 per sq ft. The mixed-use office and retail asset generates £1.22 million per annum of headline rent compared with an estimated rental value (“ERV”) assessed by the independent valuer of £1.33 million.

The freehold, 51,885 sq ft building, is 96% occupied and comprises 40,277 sq ft of office space over five upper floors with five retail units at the ground floor level and ancillary basement space. It is prominently located on St. Ann’s Square, near to the prime retail core. St. Ann’s Square features a listed church, the Royal Exchange theatre, a mix of office occupiers and high-quality luxury retail as well as leisure operators. The building benefits from its proximity to two tram stations that are within four and eight minutes’ walk respectively.

Nick Montgomery, Fund Manager of SREIT, commented:

“This acquisition is line with the strategy to selectively acquire income producing assets with good fundamentals and the potential to add value through active asset management initiatives, with a focus on improving sustainability credentials. Compared to other major cities, Manchester, which is one of the Company’s high conviction locations, currently has the lowest office vacancy rate, and we expect relatively higher growth in office rents over the next five years.”

The office space is fully let to four office tenants at an average rent of £18.65 per sq ft, with the potential to increase rental levels through refurbishment and improving sustainability performance. There is also the opportunity to enhance income by offering fitted out office space. The tenants are:

  • Ingeus UK Limited, a company that helps governments and employers design and deliver people-related services, at £405,000 per annum (£20.62 per sq ft) or 33% of total income;
  • Ecclesiastical Insurance Office Plc, an insurance company headquartered in the United Kingdom, at £137,500 per annum (£16.63 per sq ft) or 11% of total income;
  • Verlingue Limited, a chartered insurance broker, at £119,932 per annum (£16.45 per sq ft) or 10% of total income;
  • Watt Utilities Limited, a commercial energy consultancy, at £81,747 per annum (£16.10 per sq ft) or 7% of total income.


The appeal of St. Ann’s Square to high quality luxury retailers is reflected in the current tenant mix with complementary retailers located around the subject asset. During the pandemic rents were rebased by the current landlord and there are currently no arrears. The tenants are:

  • Watches of Switzerland Limited, trading as Tag Heuer, at £92,500 per annum or 8% of total income. The current rent reflects 100% of the pre-pandemic rent;
  • Russell & Bromley Limited, a luxury footwear and handbag retailer, at £175,000 per annum or 14% of total income. Russell & Bromley have recently completed a new shop fit, and the current rent reflects 69% of the pre-pandemic rent on a per square foot basis;
  • Space NK Limited, a health and beauty retailer, at £85,000 per annum or 7% of total income. The current rent reflects 89% of the pre-pandemic rent;
  • A vacant unit representing 5% of the property by ERV is under offer to an established, north-west based retailer of luxury watches and jewellery, at £70,000 per annum or 6% of total income. The proposed rent reflects 69% of the pre-pandemic rent on a per square foot basis. The lease is expected to complete shortly and there is an 18 month rental guarantee in place from the vendor to cover void and the ingoing tenant incentives;
  • A further vacant unit representing 3% of the property by ERV is subject to an 18 months’ rental guarantee at £50,000 per annum, or 4% of total income.


Following completion of the aforementioned above, the weighted average unexpired lease term is 3.4 years to earliest termination and 6.0 years to lease expiries. 58% of the property by floor area currently has an EPC rating of ‘B’ with the remainder rated ‘C’.

Following completion, SREIT’s loan to value ratio, net of cash, adopting the independent valuation as of 31 December 2021 and accounting for the disposal of The Arc office in Nottingham, is now 32.2%, with cash and undrawn loan facilities totalling approximately £16.5 million.

Further details on portfolio activity will be provided in the Company’s annual results for the year to 31 March 2022, due to be announced on 7 June 2022.

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