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Henderson delivers c.150% return from innovative Sheffield property transaction

Henderson Global Investors, on behalf of its c. £12.4 billion property business, has completed a sale and relocation project in Mosborough, Sheffield, delivering a 150% return over a two year period.

Henderson Global Investors, on behalf of its c. £12.4 billion property business, has completed a sale and relocation project in Mosborough, Sheffield, delivering a 150% return over a two year period.

In 2006 Henderson acquired the leasehold for an 88,000 sq ft warehouse on Beighton Road in Mosborough, Sheffield, which was let to Home Décor under a 10 year lease from May 2006 for £5.7m. Having identified the site as an opportune potential for supermarket development, Henderson acquired the freehold in 2010 in order to explore this opportunity. Terms were then agreed to sell the site to ASDA, subject to ASDA obtaining an outline planning consent for a food store; and Henderson relocating the Home Décor business to a new site within Sheffield.

Henderson acquired a new site for Home Décor, at Woodhouse Mill in Sheffield (close to Junction 31 of the M1) in 2012 and in turn developed a new 110,000 sq ft unit: Terms were agreed to acquire the land and enter into a ‘turn-key’ transaction with the landowner, Finnegans (whereby the land was sold to Henderson and Finnegans were contracted to build the new unit to an agreed specification). The detailed specification was agreed (with both Home Décor and the contractor), incorporating specific requirements to meet Henderson’s Responsible Property Investment policy, targeting BREEAM Excellent. Construction completed in November 2012 and lease terms for the new facility were duly agreed: Home Decor took a new 15 year lease (without a break) at a start rent of £4.75 per sq ft, rising to £5.00 per sg ft at the end of year 1, subject to RPI rental increases every 5 years thereafter (minimum 2.5% per annum; maximum 5% per annum).

In December 2012, following Home Décor’s relocation of its entire business operations, the land was sold to ASDA for £16 million, who will now develop a new 90,000 sq ft food store.

Cameron Fraser, Director at Henderson Property said: “This complex project involved a number of parties, including the original freeholder, ASDA, Sheffield City Council, Home Décor, and Henderson, who were all required to work cohesively in order to achieve the end result. To achieve a change of use to a food store, to locate, and build a new industrial unit and to relocate our existing tenant on time and on budget is a real testament to the principle team across the project.

“Not only have we been able provide Home Décor with a brand new unit (including a category B fit out) which is more suitable for Home Décor’s business growth ambitions, we have also paved the way for a new ASDA development which will deliver a number of employment opportunities to the local area. To deliver the project all the way through from a speculative and ambitious idea at the origin is truly satisfying.”

Henderson was advised by Howlings Hodgson (Asset Manager) and Lambert Smith Hampton (LSH).

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