Property developer Town Centre Securities (TCS) is to buy The Cube, a mixed leisure and office use property, in Leeds for £12m.
The Leeds-based firm said the purchase will bring high yielding income and asset management opportunities close to its existing sites. The building is located opposite the group’s Merrion Centre, which is TCS’s largest asset.
The Cube is being sold by insurance giant Aviva. Contracts have been exchanged, with completion of the purchase set for October 1.
The site is a refurbished and extended former 1960’s office building, containing 22,000 sq ft of ground floor leisure units with leases to Hard Rock Cafe and Mecca Bingo, together with 50,000 sq ft of offices over three floors which are let to Capita and the Government.
It also includes the freehold for 84 apartments which are leased to Persimmon Homes at a peppercorn rent.
TCS said the acquisition is consistent with its focus on genuine mixed-use assets and lowering its exposure to retail, which has helped ensure it has been protected from the worst of the turmoil on the high street.
Edward Ziff, the group’s chairman and chief executive, said: “The Cube represents a strategic acquisition for TCS, as we further expand our ownership in Leeds, with its proximity to the Merrion and other key destinations in the city centre. It will provide us with asset management opportunities and importantly the additional income will help mitigate the effect of further asset sales that we plan from our portfolio.
“This transaction demonstrates our ambitious growth plans, and the momentum that we are building with both our exciting development pipeline and strategic acquisitions such as The Cube and Ducie House, in our Piccadilly Basin development.”
The purchase price of £12m represents an initial yield of over 12.5 per cent on the passing income. With lease expiries in 2019 and 2020, the yield will reduce to around 9 per cent. TCS said this is a strong and sustainable return for a city centre asset.
The purchase will be funded from TCS’s existing resources and planned disposals. The firm said the re-financing of Merrion House in July this year has given it considerably greater financial flexibility.