Palace Capital buys One Derby Square in Liverpool for £14m

Palace Capital said on Monday that it has bought the freehold interest of One Derby Square in Liverpool for £14m, reflecting a 6.75% net initial yield.

This "imposing" property is situated in the heart of Liverpool and has extensive frontages onto Lord Street and Castle Street, as well as Derby Square. It has a total net floor area of 70,000 sq ft comprising six retail and one leisure unit on the ground floor and 47,500 sq ft of offices across four further floors.

It currently produces a net income of around £1m a year and is 96% occupied by tenants including Pret a Manger, Tesco, Medicash, Reed Specialist Recruitment and Brook Street.

Palace Capital said that while most of the property has been recently refurbished, significant opportunities remain for active asset management and the company will be working to a tailored plan to increase the property's income and capital value in the years ahead.

Chief executive Neil Sinclair said: "Having been working hard assessing opportunities over the past year or so and having rejected a number of investment opportunities, which we felt would not deliver value to our shareholders, we believe that this earnings-enhancing acquisition validates our decision to remain patient.

"Our strategy focuses on city centre locations in thriving university towns and regional cities, particularly where permitted development and a lack of speculative development has reduced the office stock; in Liverpool 1.15 million sq ft of office space has been taken out of the market since 2014.

"One Derby Square is centrally located, close to the Liverpool One development on Paradise Street, in a city which forms part of the Northern Powerhouse and which is going through a very considerable renaissance. We are pleased to make this investment following the recent announcement of the sale of most of the Warren residential portfolio for £18.2 million."

At 0920 GMT, the shares were up 0.2% at 318.50p.