Largest single property disposal in group’s history follows acquisition of prominent Southampton site and redevelopment of landmark office building in Weybridge.
Established in 1932, RO Group is a family owned business which has a long heritage of investing in local economies across the UK. It has achieved this through a variety of trading and investment businesses, operating across diverse sectors, as well as by providing substantial support of local community charitable projects and causes.
Through its wholly owned subsidiary RO Real Estate, which acquires, manages and develops commercial property assets, RO is delighted to announce two significant transactions, both of which underline its strategy of adopting a long term approach to business.
Firstly, RO has acquired a prominent 48,441 sq ft office development on the harbour front within Town Quay, Southampton, from TH Real Estate for £7.6 million. Existing tenants include Bank of Scotland, the Secretary of State for Communities and Local Government and Lambert Smith Hampton. There are two vacant floors totalling circa 8,725 sq ft which RO is currently refurbishing having agreed a letting at £170,000 per annum; on completion of this letting the property will be fully let. The site is a short walk from West Quay and in an area that has been earmarked for significant redevelopment with numerous retail, commercial and residential development projects planned. LSH advised TH Real Estate on the sale of Southampton and CBRE advised RO.
With a more than 80 year track record RO has always been committed to identifying and assessing long and medium term opportunities in regions which are being transformed as part of wider urban planning projects. This entrepreneurial attitude and investment in property has run through the ethos of RO Group since it was founded in 1932 by Stanley Graham Rowlandson. His innovative attitude to business has been carried forward by his son, and current Chairman, Richard Rowlandson, who used the Group’s property and retailing experience to develop over 40 neighbourhood centres in the 1980s and 90s and more than 30 Pegasus retirement homes in the 2000s. Now Graham’s grandson and current Group Managing Director, Edward Rowlandson has grasped the mantle overseeing the Group’s investment in various entrepreneurial ventures.
The Group has also just achieved the largest single sale of an individual property asset in its history, being the Staycity Hotel development in Birmingham’s Jewellery Quarter. The Staycity development, which consists of 170 apartments within a five minute walk from the City Centre, has been sold to KFIM Long Income Property Unit Trust (Knight Frank Investors) for almost £21 million.
The land had been in the RO’s ownership since 2008 and despite significant commercial challenges along the way, including two contractors going into administration, RO persevered with the project creating an impressive development right in the centre of Birmingham. Colliers advised RO on the sale of Staycity and Mulberry Bay advised KFI.
Alongside these two transactions the RO has also recently embarked on a speculative redevelopment project in Weybridge. Dakota, previously known as Persimmon House and acquired in late 2013, is a 22,000 sq ft headquarters office building which is being refurbished and extended to provide 35,500 sq ft of grade A space. Construction work has begun and should be complete by the end of March 2017.
Richard Bourne, head of RO Real Estate, commented:
"These three examples are all reflections of the RO’s approach to property; finding opportunities to create value in every asset we own whether through redevelopment, refurbishment or general asset management. In doing so, we aim to deliver the optimum returns for the company and the highest quality assets for our occupiers.
The sale in Birmingham places us in an extremely strong position with significant cash resources, enabling us to move quickly and take advantage of new opportunities as they arise. The current portfolio performs very strongly and we are seeking to build on this by deploying circa £30m of cash in £2-6m lot sizes across southern England. All acquisitions will need to meet out strict criteria: low availability and high take up/demand in strong macro and micro locations. We always look at alternative use options and this can lead us to also buy some less obvious assets such as petrol filling stations and garden centres as well as the more mainstream sectors. The portfolio is risk adjusted with some long income, dry investment assets as well as some value-add opportunities and this will continue.
The acquisition in Southampton is evidence of our investment in strong regional markets. This is a good-quality and extremely well-located asset which should prove reversionary given the occupational supply and demand dynamics. It also offers the opportunity to add value through an active asset management strategy."
Edward Rowlandson, Group Managing Director, RO Group said:
"Our experience in Birmingham can perhaps be seen as a microcosm of the recent economy as a whole with its various ups and downs. The team have worked extremely hard to overcome the various challenges, finding solutions to problems and eventually concluding on the sale of this high quality asset. With the additional resources the disposal has provided we look forward to acquiring new assets which conform to the RO’s instinctive ‘in business to do business’ approach to property."