Sep 24, 2018
Zara owner's property investment firm buys a slice of Glasgow's style mile. Pontegadea, which is owned by Spanish billionaire Amanico Ortega, have bought a holding at 79-80 Buchanan Street and 9-17 Exchange Place.
Spanish retail billionaire Amancio Ortega's property investment firm Pontegadea has bought a 'style mile' retail and office holding in Glasgow city centre from Lothbury Investment Management in a £31 million deal. The holding at 79-80 Buchanan Street and 9-17 Exchange Place, which was sold on behalf of the Lothbury Property Trust, will join the Pontegadea portfolio owned by Ortega. The Spanish businessman was the co-founder and owner of the Inditex Group best known for its ownership of the Zara retail chain.
The 35,000 sq ft property comprises retail, leisure and offices and produces annual rental income of £1.3 million. The sale represents an initial yield of 3.99 per cent. Buchanan Street, known as Glasgow’s ‘Style Mile’, is home to a number of international retailers and is the second busiest retailing street in the UK, after London’s Oxford Street.
At the end of last year, Lothbury agreed an extension of Vodafone’s lease on their prominent corner unit by a further 10 years from December 2019 at £320 per sq ft, a 23 per cent uplift and a new record rental for Buchanan Street. Mike Toft, senior fund manager and executive director of Lothbury Investment Management, said: “Buchanan Street has been one of Lothbury Property Trust’s top performing assets since we purchased it in 2013, as a result of repositioning the property after a number of asset management initiatives.
“The building was purchased from out of administration for £17.42 million. It was a key purchase as it fitted our strategy of investing in prime locations with excellent growth potential. “Indeed, rental growth has remained good despite the downturn in retail, with rents rising from £260 to £320 per sq ft in just three years. “However, with the challenges now facing the retail sector, this was a good opportunity to sell and reinvest in other areas, particularly the industrial and alternative sectors. “The disposal is in line with our strategy of selectively reducing the fund’s exposure to high street retail.”
CBRE acted for Lothbury; Sheridan Property Consultants acted for Pontegadea.