Sale of 3M Headquarters, Bracknell
3M Headquarters, Bracknell
This was the first major asset that Evans Randall acquired in March 2005. The investment featured a 22 year lease of 3M’s European Headquarters with fixed rental increases of about 2.5% every year. We acquired this asset by not just bidding a fair price, but, more importantly, agreeing to complete the purchase in a very tight timescale of ten days from start to finish.
The capital cost of the asset was £75 million, which was financed by non-recourse senior debt of £66 million and an equity bridge of £9 million provided by Evans Randall. Following acquisition of the asset the equity was sold to co-investors, replacing the equity bridge with private equity. At the time of the investment Evans Randall targeted an annualised return on the £9 million of equity invested of between 20% and 25% per annum over a three to five year timescale.
After March 2005 there was considerable yield compression in the commercial real estate market which, when combined with a significant growth in the rental, enabled us to sell the asset at a price to generate £20 million of value for our co-investors. This enabled the original investment of £9 million to be returned to them plus a profit of about £11 million, providing an impressive “cash on cash” return of about 114% (41% IRR).