HQ Office Property, Cheltenham
Strategic Investment Management (SI) was the sponsor and operator of SI Limited Partnership No 3, a limited partnership offering investors a potentially tax efficient means of investing directly in the UK commercial property market.
In December 2004, the Partnership acquired the UK office headquarters of Eagle Star Insurance Company Ltd, situated on the outskirts of Cheltenham. The Grade A property provides circa 180,000 sq. ft with car parking for just over 1000 cars on a site of 14.7 acres. It was acquired for a total acquisition price of £36.2m.
At the time of purchase, the lease to Eagle Star had just over 17 years unexpired on full FRI terms, with upward only rent reviews. As a well-established financial services organisation and a subsidiary of Zurich Insurance, this provided a strong tenant covenant.
Investor equity raised by the Partnership totalled £8.6m, with the remainder of the funding provided by a bank loan from HBOS.
The property was disposed of in July 2006 for £39.1m, providing an investor return of 30% in 19 months.