Standard Life Property Income Trust completes first development

Standard Life Investments, one of the largest real estate investors in Europe, has announced, that the Standard Life Investments Property Income Trust PLC (SLIPIT) has recently completed the development and letting of a bespoke headquarters facility in Aberdeen for Hydrasun Group.

This is the first development SLIPIT has undertaken as in the past the Trust has only purchased income producing properties. The purchase was made possible by the Trust's high level of income from other investments and revenue reserves from earlier asset management initiatives.

The building was pre-let to Hydrasun for a term of 20 years and consists of a three storey office of 21,000 sq ft and a mixed industrial / training unit of 71,150 sq ft. It is located on the Aberdeen Gateway Business Park which is a new development just to the South of Aberdeen on the A90.

Jason Baggaley, Fund Manager of SLIPIT said: "Because of the healthy state of Standard Life Investments Property Income Trust's revenue account we were able to undertake the development funding. With a pre let agreed with a strong tenant, and a respected development partner with a strong track record, the development risk was minimised, allowing the SLIPIT to acquire a good quality building and cash flow."

"The funding was agreed in September 2009, before the investment market rallied for long term secure income, so the pricing was attractive to us. The investment has seen an increase in value of approximately 15% over the cost of the development and the ongoing income from the lease means that our dividend of 4.4 pence per share (giving a dividend yield of 6.8% on a share price of 65p as at 22 February 2011) is fully covered in 2011."

Bob Drummond, Chief Executive Officer, Hydrasun Group, said: "The combination of the excellent location, the fast track build programme and the standard and quality of the facilities, along with attractive commercial terms made Aberdeen Gateway Business Park an obvious choice for Hydrasun. We have been very impressed with Standard Life Investments' Real Estate Department and the development team at Stockland Muir. In particular the way they were able to incorporate some additional requirements with minimal impact on schedule or costs."

The site was developed by Stockland Muir, a successful joint venture between Stockland and Muir Construction.