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Washington's popularity helps factory owner to 30% sale profit.

An Edinburgh property company has made almost 30% profit in just 10 months on a Washington industrial building.

Kenmore Property Group made the spectacular return after selling the Stephenson Road property to fund manager Threadneedle Property Investments for pounds 2.65m in October, a 7.89% initial rental yield. It had bought the 70,000sq ft property from the US parent of the sole tenant ( hearing-aid battery maker Rayovac ( for pounds 2.06m in November 2004.

After the acquisition, Kenmore increased rents from pounds 2.90 per sq ft to pounds 3.25 in a rent review, raising the annual rent roll from pounds 203,000 to pounds 223,000. The next review is in three years' time.

Dickon Wood, head of investment at King Sturge's Newcastle, which acted for Kenmore, said: "We acquired the building knowing the rent was undervalued and having done the review have also been able to take advantage of the yield compression in the market place."

Five bids were received for the property, which was selectively marketed in the summer, including offers from local and London property companies. Mr Wood said: "Washington is a popular location for manufacturing and industry and has benefited enormously from the business that Nissan has brought to the area."

The yield is not as sharp as the most recent industrial sale in the area ( a Spire Road unit sold in June for pounds 2m and rumoured to have sold at 6.75% yield, although the lease still had 11 years left to run compared with five years for the Stephenson Road property. DTZ was selling agent for owner City & Northern.

The sale is part of a general sale by Kenmore, which last week is believed to have parted with offices in Newcastle city centre and Washington, after putting them on the market as part of a national portfolio for about pounds 15m. London agent Strutt & Parker acted for Kenmore.
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Title Annotation:Business
Publication:The Journal (Newcastle, England)
Date:Dec 21, 2005
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