28th September 2013

Caledonian House, Aberdeen

A 43,000 sq. ft. office building with ground floor retail let to engineering company JP Kenny on an internal repairing lease with a Tenants break option in 2015.

The lease has been re-geared to provide a new 10-year institutional full repairing lease subject to Ediston carrying out an agreed specification of works to upgrade the building.


Purchase price: £7.75m
Total costs: £10.75m (including refurbishment costs)
End value: £15m


  • Acquired a secondary office investment in a prime location at a competitive price in a strong market. Net Initial Yield on Purchase was 9.25%.
  • Negotiated a 10-year lease extension with the Tenant who required the building to be refurbished to remain in the building.
  • New lease is agreed at a higher rent with fixed uplifts.
  • Conversion of a secondary investment into a prime asset by re-gearing the lease, refurbishing the property and restructuring repairing obligations to create an institutional investment.
  • The lease re-gear and refurbishment delivers a market value improvement of £4.25 million.
  • The office and retail investment was sold to Tesco Pension Fund on Christmas Eve 2013 for a price of £15.3 million, reflecting a net initial yield of 6.67% delivering an IRR of 107%.

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