Circle Property offloads Birmingham's Somerset House

Circle Property announced on Wednesday that, in line with its disposal strategy, it has exchanged contracts on the sale of Somerset House on Temple Street in Birmingham.

The AIM-traded firm said it sold the refurbished mixed-use city-centre property to Somerset Land and Property for £15.18m, with completion expected by the end of February.

It said Somerset House consists of about 38,805 square feet of office space let to BE Group, and 10,956 square feet of leisure accommodation let to Las Iguanas and Camerons Brewery, with two leases of around 13 years to expiry, and total passing rent of £1.2m per annum.

Somerset House was acquired by the group in January 2016 for £7.75m, and the profit before tax for the year ended 31 March attributable to the property was £0.51m.

The board said the sale price of £15.18m represented a 96% uplift on the initial purchase price, but a decrease of 16.1% on the 31 March valuation of £18.1m.

It said the price was reflective of the reduction in valuations being seen across the wider UK commercial property market at present, as well as yield shift.

“As previously announced, the company repaid the amount outstanding under its debt facility in full and is debt free,” the board said in its statement.

“The net proceeds from disposals, following completion, will be held as group cash and the board expects that a minimum of two returns of capital will be made to shareholders, the first of which is expected to occur by March.

“The company's current cash balance, following completion of the previously-announced disposals of buildings K1 and K2 at Kents Hill Business Park, Kents Hill, Milton Keynes; Cheltenham House, Temple Street, Birmingham; and Elizabeth House, London Road, Staines, is £23.8m.”

At 1244 GMT, shares in Circle Property were up 1.83% at 216.9p.

Reporting by Josh White for Sharecast.com.