Balanced Commercial Property Trust continues office sell off

Balanced Commercial Property Trust has sold two office assets for a total of £41.65m, further reducing its exposure to the sub-sector.

The sales of 7 Birchin Lane, in London, and 82 King Street, in Manchester, were sold at a discount to book value (as 31 March 2024) of 7.2%.

Following the sales, BCPT’s portfolio exposure to the office sector has reduced to 17.8% by capital value, down from 29.6% as at 30 June 2023. BCPT has now completed six office disposals since the beginning of December 2023, raising aggregate sales proceeds of £110.52m at an average discount to the preceding valuations of 4.4%.

The proceeds from these sales have allowed BCPT to repay its revolving credit facility in full and it will have cash in excess of £100m on completion of these sales.

In addition, BCPT has announced that it has secured four new leases at St Christopher’s Place. The new lettings at the company’s flagship asset, which comprises 172 lettable units and 40 buildings, diversified across the retail, leisure, residential and office sectors, comprise Sunday in Brooklyn, a modern American restaurant; Noreen, a new Middle Eastern restaurant concept; Bar Kroketa, a Spanish restaurant and bar concept; and Morena, an all-day dining concept with a Latin-American inspired menu.

The lettings are part of the company’s strategy to rebalance the estate towards the food and beverage sector. Between March 2023 and March 2024, the estate’s exposure to the F&B sector grew to 42% from 32% by capital value, with further F&B lettings in the pipeline.

The company said that it expects F&B to drive investment fundamentals with superior rents, longer leases and improved capitalisation rates, while also enhancing the consumer experience and occupier dynamics of the estate by extending dwell time, consumer spend and active trading hours.

Richard Kirby, fund manager of BCPT, said:

“We have now disposed of six office holdings since December 2023 and these two office sales were at an opportune point in the asset life cycle to optimise exit value. The pricing achieved further underlines the liquidity in the portfolio, despite the challenging market backdrop for the office sector.

“The F&B sector has proven itself to be highly resilient in recent years and an increasingly attractive sub-sector of the market for investors. The Company’s flagship asset is well-positioned to take advantage of these trends. St Christopher’s Place endured a challenging time during the pandemic but I am pleased to see the buoyant levels of activity at the estate, signalling the estate moving from recovery into a growth phase.”