Balanced Commercial Property Trust sells Leonardo building to refocus portfolio

Balanced Commercial Property Trust Ltd (BCPT) has taken a significant step in its strategy to adjust its portfolio by selling the Leonardo Building, located in Crawley’s Manor Royal Business District. This move aligns with BCPT’s objective to lessen its exposure to the UK’s challenged offices sector. The property, encompassing 110,000 sq. ft., was sold for a headline price of £26.1 million. This sale price reflects a 6.1% discount to its December 2023 independent valuation, with the net realization adjusted for rental top-ups upon completion in March 2024.

The Leonardo Building, a major component of BCPT’s portfolio and its largest office holding by capital value, has been under BCPT’s ownership since 2015. Fully occupied by Virgin Atlantic until 2032, this property is a significant asset within the thriving Manor Royal Business District.

This transaction is part of a broader initiative by Balanced Commercial Property Trust to decrease its portfolio’s office sector exposure from 24.4% to 22.2% by capital value, as per the December 2023 independent valuation. The company has been actively engaging in discussions with several potential buyers for further disposals, emphasizing its commitment to a strategic portfolio rebalance.

Throughout the current year, BCPT has successfully disposed of four office holdings, generating £68.865 million in capital proceeds. These transactions have been executed at an aggregate discount of 2.6% against the latest independent valuation, with three sales focusing on regional out-of-town offices—a market segment facing structural challenges.

Richard Kirby, Fund Manager of Balanced Commercial Property Trust, highlighted the company’s investment philosophy, focusing on high-quality real estate with strong fundamentals. Kirby’s statement reinforces BCPT’s resilience in executing disposals of non-core office holdings at competitive pricing. Looking forward, BCPT plans to shift its investment focus towards sectors with robust growth potential and resilient occupier markets, specifically targeting industrial & logistics and operational alternatives sectors.

As Balanced Commercial Property Trust continues its strategic journey to reduce office sector exposure, further disposal activities are anticipated in the near term. This proactive approach underscores BCPT’s commitment to optimizing its portfolio to navigate the evolving commercial real estate landscape effectively.