Exclusive: Deals put property sector on road to recovery

No.1 Whitehall Riverside is under offer for about 50m, while Benson House is believed to be under offer for an estimated 20m. Both are home to some of the region's top professional services firms in Leeds.

It is understood that funds from the sale of Benson House, which is owned by MEPC, will be used to re-start the developer's Wellington Place project, the office and residential scheme which was put on hold during the recession.

It is the second time that No.1 Whitehall Riverside has been sold in the last year and the investment deal is believed to be one of the largest outside London so far in 2010.

AIM-listed group London & Stamford Property is understood to be selling the building to NFU Mutual for over 12m more than they bought it for last May.

The deal would equate to a net initial yield – the rent generated by a property expressed as a percentage of its valuation – of around six per cent.

One property agent said: "I think they (NFU) overpaid for it, although they may think that yields will get better as time goes on."

The building, which generates 3m a year in income, is multi-let to seven tenants including law firm Cobbetts, Mellon Analytical Solutions and accountants Grant Thornton.

There is still over 5,000 sq ft of space to let on the ground floor, which has never been occupied since it was completed in 2006. There is also 5,000 sq ft still vacant on the seventh floor.

Robin Bullas, associate director for capital markets in the North East at CBRE Leeds, said: "The market is improving and the alleged price they are buying it for is a good deal for both sides."

New Star Asset Management bought the 130,000 sq ft property for 60m from Leeds-based Town Centre Securities four months after it was completed in 2006.

London & Stamford then bought it for 37.62m last May.

Roger Woolhouse, head of investment at BNP Paribas Real Estate, said: "Private individuals and companies, like London and Stamford, who bought property in 2009 have had the market all over them in the last couple of months. The market is flush with money for property deals."

He added: "The offer for No.1 Whitehall reflects the quality of the stock, its good covenants and location.

"This could be one of the biggest deals in the regions outside London this year, which is indicative of the strength of the property market for quality stock."

Benson House, which is home to Pricewaterhouse Coopers and law firm Ward Hadaway, is understood to have been put on the market for bids over 18.31m.

A number of people are believed to have expressed an interest in the building.

Simon Lister, investment director at Savills, said: "The fact that it has attracted a few interested parties shows there is money out there for the right property and location."

Mr Woolhouse added: "These two deals will sharpen up values for future investments."

MEPC said it is planning to submit a detailed planning application to Leeds City Council for No.3 and No.10 Wellington Place in the next six weeks.

Rick de Blaby, chief executive of MEPC, said work could start next year if the plans are accepted.

It is understood that the sale of key buildings within MEPC's portfolio, including Benson House, will be used to fund the two buildings which total 24m.

The development is on the site of the Leeds Central railway station, which closed in the mid-20th century.

Developer's urban space to avoid an eyesore

Developer MEPC has invested 1m to turn part of Wellington Place into a "city centre resource" with urban gardens and a five-a-side football pitch until work resumes on the development.

The latest work outlined a new walkway, Wellington Place Boulevard, and exposed the view of the historic lifting tower from Whitehall Road. It also opened up Northern Street to create more open space surrounding the site.

Chief executive Rick de Blaby said that too many developers were leaving large, undeveloped sites as eyesores.

At the end of 2008, MEPC received outline planning permission for the third phase of the development which includes two office buildings – the 120,00sq ft No. 3 Wellington Place, which would cost 20m to develop, and the 25,000sq ft No.10 Wellington Place, which would cost 4m.

Detailed planning permission is due to be submitted to Leeds City Council in the next six weeks.

The height of the total 2.6m sq ft scheme has been reduced by half since the economic downturn with no building rising above six floors and instead of steel and glass the buil-dings will be made out of brick and stone.