Cubex Land, a leading South West property developer backed by Palmer Capital, has successfully exchanged with completion to shortly follow, the Landmark Grade A office building, Aurora for £62.13m to Royal London Asset Management, achieving a 4.75% net initial yield. Aurora has been the only speculative office development under construction in Bristol and has therefore been able to secure record headline rents throughout its construction.
Aurora was funded by Palmer Capital Development Fund IV, a programmatic venture managed exclusively on behalf of clients of CBRE Global Investment Partners (“CBRE GIP”). The scheme comprises 95,531 sq. ft. of office accommodation and forms part of the vibrant 4.7 acre mixed-use scheme in Bristol’s waterfront called Finzels Reach.
The sale affirms the Palmer Capital investment thesis which is to acquire in undersupplied markets and build best in class new buildings which offer flexible and productive accommodation for the modern occupier. Through undertaking and taking selective development risk, Cubex, Palmer Capital and CBRE GIP have been able to deliver outstanding returns for their clients – namely over 2x equity multiples and 60% IRRs.
Aurora has set a new regional benchmark for quality and sustainability, achieving one of the highest accolades of ‘Greenest’ office outside of London, with BREEAM ‘Outstanding’ and LEED ‘Gold Standard’ environmental accreditation. In addition, Aurora achieved a Platinum Wired Score in January 2018, which is the highest rating for connectivity and digital infrastructure.
The office which has just been certified to practically complete is already 85% pre let, achieving record rents with each letting. Tenants of the building include intellectual property specialist Mewburn Ellis, which took 13,438 sq. ft. in September last year, law firm Simmons & Simmons, which agreed a 27,238 sq. ft. lease for the two top floors in January, as well as financial services Parmenion, an Aberdeen Standard subsidiary company, who have taken 31,233 sq. ft. on the third and fourth floors.
The building has been designed to the highest specification, arranged over seven floors, incorporating a stylish roof terrace, a secure basement car park and many features added to promote an inspiring and dynamic work environment.
Cubex and Palmer Capital will be looking to replicate the quality of Aurora in their new project opposite, on the site of the former fire station. This will form the next phase of Finzels Reach, a project which has transformed Bristol’s city centre to create a vibrant place where the people of Bristol wish to live, work and socialise. This project will also be supported by CBRE GIP.
Aurora sits in a prominent position adjacent to the floating harbour amongst a blend of historic buildings and contemporary architecture. By 2019, some 2,500 people will be living and working at Finzels Reach, with 437 new apartments, alongside 240,000 sq. ft. of new office space. It will become a magnet for the public and tourists with 30,000 sq. ft. of shops, restaurants, a micro-brewery and a 168 -bedroom new Premier Inn hotel. The £250m, 1m sq. ft. development scheme has brought a new lease of life to the city, including the erection of the brand new £2.7m iconic S-shaped Bridge connecting Castle Park with Finzels Reach, which will further knit the Finzels Reach site back into the fabric of the city.
Savills acted for Cubex and Palmer Capital. Knight Frank acted for Royal London Asset Management.
Peter Walford, Director at Cubex, commented: “Our commitment to delivering a first class, highly sustainable office building in the heart of the city has been instrumental in helping us attract a fine mix of quality tenants, and to consistently push rental levels to record highs. We are therefore delighted that Royal London have recognised these attributes and chosen to purchase the created investment.”
Steve Wright, Director at Palmer Capital, commented: “We are delighted to conclude a successful business plan which ratifies our core investment thesis in delivering modern, flexible and high quality accommodation which delivers superior performance for the fund.”
Alex Bignell, Region Head of UK, CBRE Global Investment Partners, said: “We were excited to support the speculative development of Aurora, recognising the excellent supply and demand fundamentals of the Bristol office market. We shared the vision of Cubex and Palmer Capital for the project and are delighted with the success of the scheme for our clients.”
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