The Herald - November 27, 2010
Scottish and Southern Energy is set to rake in at least £10 million by quickly offloading the Central Belt headquarters that it bought in Glasgow last month.
According to well-placed sources, the Perth-based energy giant is close to selling the nine-storey One Waterloo Street building in a 35-year sale and leaseback deal to Prupim, the investment vehicle of pension group Prudential.
Having originally paid somewhere north of £20m for the beachhead deep in Scottish Power territory in early October – which was seen as a knock-down price at the time – SSE is poised to significantly increase the value by committing itself as a long-term tenant.
Although SSE’s rental costs over the duration of the lease are very likely to exceed any windfall a deal will free up a substantial amount of capital for investments.
SSE has been an aggressive investor in renewable technologies as it seeks to maximise its earnings from the renewable obligation system of UK green energy subsidies in the coming years. It invested £3m in Edinburgh-based wave energy pioneer Aquamarine Power earlier this week. Other recent investments included buying an £8m 15% stake in April in Burntisland Fabrication, which has become a world leader in foundations for offshore wind turbines.
Property watchers were impressed by the speed at which SSE concluded the two deals, particularly compared to the many months that Scottish Power has spent weighing up whether to take a new large office space near the city.
One source said: “SSE bought it cheap and then quickly sold on the investment. They’re good operators.”
One Waterloo Street, which SSE bought from Australia’s Halladale Group, is to be used by the group primarily for its renewable energy activities. It is in the course of investing many billions into the sector, particularly onshore and offshore wind farms but also hydroelectricity, biomass and marine energy.
The city is also to be the location for SSE’s Centre of Energy Excellence for Renewable Energy, a joint venture with Strathclyde University that has received £2.8m of funding from the Scottish Government.
One Waterloo Street overlooks Glasgow Central Station and sits on the former site of Shaftesbury House. Its 60,000sqft of space could accommodate around 600 employees. SSE sublets some of the space to property agency CB Richard Ellis, which is set to remain there. SSE itself is due to start moving in staff members in the New Year, and is said to be planning an official opening around that time.
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