Bizspace Group, the logistics and office business space operator, is drawing investor interest in its 97 multi-let properties from a raft of mid-sized private equity funds and specialist operators ahead of first round bids in two weeks.
PwC and Savills are seeking offers in the region of £120m for the granular UK nationwide portfolio – in a sale process dubbed Project Spring – through the sale of the Bizspace Group, formerly owned through a fund managed by Highcross.
The 97 freehold properties in HXRUK II (Bugatti) Ltd, plus the sale of the share capital in Bizspace Ltd, is currently drawing interest from a raft of bidders.
These are thought to include: Regus, Bridges Ventures, Varde Partners, Park Street Advisors, Goldman Sachs, Workspace, Clearbell, Hansteen, Europa Capital with Flexspace and Colony Capital.
First round bids have been called for this Thursday 2 April, with a winner expected by the week after Easter.
The guide price reflects £20.40 per sq ft and a yield of 9.3% on profit before interest and tax (PBIT) basis, assuming 5.8% in purchasers’ costs.
Project Spring is a bank-led distressed portfolio by the syndicate of lenders, led by RBS. The outstanding balance is thought to be higher than the £120m asking price.
The business suffered a decline in revenue and operating profit during the recession of 2009-13 as its exposure to the SME sector in the Midlands and North resulted in pressure on rents and occupancy.
Bidders will be looking to capitalise on the potential for rental income growth through exposure to the SME sector as the economic recovery in the UK continues, as well as realising value through certain site disposals which offer alternative use options and crystallising a ‘core’ portfolio with a more attractive residual yield.
The company sale also includes 174 staff which manages the business.
Project Spring includes storage, office space, workshops, industrial units, serviced offices and meeting rooms, spread across 97 sites in England and Scotland.
The property portfolio is spread over 5.87m sq ft and 6,004 units, which is 76% weighted towards light industrial units.
The balance is comprised of 19% to offices and 5% to storage units, workshops and meeting rooms. By geography, the portfolio has concentrations in London and the South as well as core industrial centres in the North West and Yorkshire & Humberside regions.
The majority of the portfolio is let on flexible licences, typically for 12 months, to a mix of SMEs, start-ups and larger corporates to whom Bizspace also provides ancillary services, such as telephony systems, meeting spaces and postal services.
Annual gross income is £28.04m and the net income is £14.71m, with the difference due to overheads running the sites, central office costs. The business is heavily operationally geared.
The PBIT is £11.85m, all figures are to the year to 31 December 2014. In addition, occupancy across the portfolio was at 79.7%, to the same year end date, up 3.3 percentage points year-on-year.
By portfolio rent, tenants include: 27% to small manufacturing firms, 13% to retail distribution, 12% to leisure, food, drink and media firms, 16% to business services.
No single tenant represents more than 1% of gross income.
Properties include: Greencroft Industrial Estate, County Durham; The Didcot Enterprise Centre, Didcot; Team Valley Business Centre, Gateshead; Bizspace Business Park, Wakefield; and Roden House Business Centre, Nottingham.
Savills and PwC declined to comment.