The UK government has agreed a major new lease deal on office space in Birmingham.
The Ministry of Housing, Communities and Local Government has signed a ten-year lease at £15.75 per sq ft for 48,787 sq ft of space at B1 in the Jewellery Quarter.
The building covers 92,472 sq ft and is home to Birmingham and Solihull Mental Health NHS Foundation Trust.
B1 was acquired in 2018 by joint venture development team Apsley House Capital and Galliard Homes.
At the time of the purchase, they said they wanted to build more than 500 new apartments on the four-acre site at the corner of Summer Hill Road and Icknield Street.
Apsley House Capital and Galliard Homes are behind several other projects in Birmingham including The Timber Yard apartments near the Hippodrome and Soho Wharf in Ladywood where they are planning to build more than 750 apartments and townhouses.
Chris Duffy, acquisitions and commercial director at Galliard Homes, said: "This is a massive commercial deal for Birmingham and the West Midlands.
"The decision by the Secretary of State for Housing, Communities and Local Government to acquire these premises underlines the importance of Birmingham as the second city in the UK and the capital of the Midlands."
Property agencies Lambert Smith Hampton and Avison Young advised on the deal.
In a separate announcement, the Ministry of Housing, Communities and Local Government has also renewed its existing deal on Sandford House in Solihull town centre.
Under the new lease agreement, the 33,954 sq ft property has been let for another 15 years, with five yearly open market rent reviews and a tenant break option at year ten.
The ministry intends to carry out a major refurbishment of the property over the coming weeks.
The new lease agreement increases the rental income from the property for landlord AEW UK REIT by 30 per cent.
The site is close to Solihull's railway station and counts National Grid, John Lewis and West Midlands Police among its neighbours.
Alex Short, portfolio manager of AEW UK REIT, said: "We are delighted to have secured this highly profitable lease renewal that crystallizes both income growth and value creation for the company's investors.
"The conclusion of this business plan at the current time….highlights the durability of the company's strategy in seeking to acquire assets whose pricing is misaligned with their long-term fundamental value.
"We continue to look for attractive purchasing opportunities that will deliver robust returns to our shareholders through the active management of our properties."
