The Ministry of Housing, Communities and Local Government has extended its lease at Oakland House in Manchester.
This strategic move secures the site until June 2029, offering significant operational stability.
Lease Renewal and Background
The Ministry of Housing, Communities and Local Government, led by Deputy Prime Minister Angela Rayner, has renewed its lease on Oakland House. Located on Talbot Road, Manchester, this site will be used as the Deputy Prime Minister’s base for several days each week.
Regional REIT, a property firm with offices in Old Trafford overseeing properties throughout the North West, disclosed the agreement. The renewed lease will continue until June 2029, with an option to break in 2027. The annual rent is set at £59,500 for 5,450 sq. ft of space, which calculates to £10.92 per sq. ft.
Changes in the Ministry
Formerly known as the Department for Levelling Up, Housing and Communities, the Ministry was rebranded following Labour’s recent General Election win.
Deputy Prime Minister Angela Rayner has committed to initiating a ‘devolution revolution,’ promoting the enhancement of local governance and power.
Oakland House is among numerous lease renewals by Regional REIT nationwide, including in cities like Leeds, Cardiff, and Birmingham.
Regional REIT’s Progress in Lettings
During the quarter leading to June 30, 2024, Regional REIT reported significant progress in lettings.
Six notable leases were exchanged, totalling 69,067 sq. ft, equating to an annual rental income of £700,000 when fully occupied.
Regional REIT achieved an average rental uplift of 11% against December 2023 estimated rental values (ERVs).
Additional Lease Renewals and Disposals
In the same period, an additional seven leases were renewed totalling 47,000 sq. ft and generating £600,000 in annual income.
Three properties were sold, alongside a partial sale, with total sales proceeds reaching £6.9 million, reflecting a net initial yield of 9.6%.
Capital Raise and Financial Strategy
In late June, Regional REIT raised £110.5 million through a fully underwritten Placing, Overseas Placing, and Open Offer, backed by Steve Morgan of Bridgemere Investments.
The raised funds will fully repay Regional REIT’s £50 million Retail Bond, reducing short-term liabilities and improving financial stability.
Utilisation of Raised Capital
£26.3 million of the raised capital will reduce bank facilities, providing greater headroom under covenants.
The remaining £28.4 million will be allocated towards selective capital expenditure, enhancing earnings in the short term and adding value in the mid to long term.
Statement from London & Scottish Property Investment Management
Stephen Inglis, CEO of London & Scottish Property Investment Management, expressed satisfaction with the recent lettings and disposals progress.
Inglis noted the success of the £110.5 million capital raise, ensuring the repayment of the retail bond and reduced loan-to-value ratios.
The lease renewal at Oakland House is a strategic decision aligning with Angela Rayner’s commitment to enhancing local governance.
Regional REIT continues to make significant strides in property management and financial stability.