Knight Frank has concluded the sale of a prominent North-east office complex as investor confidence in Aberdeen holds firm.
Peregrine House, providing 22,000 sq ft of existing accommodation and with a 9,000 sq ft Grade A extension set for completion in January 2016, has been bought by Capital Trust on behalf of private investors in a £10.2m deal.
Knight Frank represented the vendor, Carnegie Property Company, in the transaction and believes the deal is an important milestone in the current market cycle.
Chris Ion, an Associate in the Aberdeen office of Knight Frank, said: “We are delighted to have completed the deal, which demonstrates the attraction Aberdeen and the north-east still holds for investors. Despite the well documented impact the drop in oil price is having on the local economy this proves that the right investment product will always be in demand.
“Peregrine House is a property we know well, having handled the long term letting to Schlumberger Oilfield UK last year, and we were confident of a successful sale given the attractiveness of the long term lease and tenant covenant.”
Finola Reynolds, of the Capital Trust Group, which was represented by Ryden in its purchase of the property, said: “We are pleased to have secured another long term income asset in the traditionally robust Aberdeen commercial market, which is the best performing in the UK after London.”
Ken Shaw, investment and finance partner at Ryden, said: "The acquisition of Peregrine House was completed off market in advance of Carnegie extending the building for Schlumberger. The combination of secure income from a quality building let at an attractive rent was very appealing to my client and the guaranteed uplifts should provide strong long term performance."
Knight Frank’s own newly published regional office market research notes that the volume of investment transactions deteriorated in H1 2015, following a significant fall in oil prices which occurred in the final quarter of 2014.
The last time Aberdeen saw such a lack of investment activity in the first six months of the year was in 2009, when the city faced the impact of the global financial crisis and the last oil price crash.
However, this should not discourage investors looking at Aberdeen, as well-let opportunities to strong covenants continue to attract good levels of interest at higher yields than most regional cities.
Chris Ion added: “We benefit from Knight Frank’s national and international insight, which helps us track not only our own region’s performance but to draw comparisons with the key UK regions.
“The Aberdeen market is going through a clear period of transition but we remain upbeat about the long term prospects and the Peregrine House deal is just one example of the higher yields available to investors in Aberdeen compared with similar product in the other regions.”