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Mailbox REIT signs up six new leases totalling almost 17,000 square feet of its central Birmingham p

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Mailbox REIT PLC said it has signed six new leases totalling 16,913 square feet of the Mailbox, the landmark central Birmingham property.

The latest lettings, which were agreed above the estimated rental value, follow hard on the heels of an outline deal agreed with serviced officer provider IWG, which will run 50,000 square feet on the building’s Level-One under the Spaces co-working brand.

The latter in particular is expected to help the REIT, which is listing on the International Property Securities Exchange (IPSX) next month, lift its yield from 5% to above 7% over the medium-term.

Richard Croft, chairman of M7 Real Estate, the Mailbox’s current owner and the REIT’s manager post-IPO, said the latest collection of lettings reflected “the ongoing momentum behind the implementation of our asset management strategy for the Mailbox, despite the challenging backdrop”.

“Once the market normalises following the pandemic, they will provide amenities for our office tenants. Having secured the important agreement with Spaces, we are well on our way to realising the full potential of the Mailbox as a pre-eminent ‘live work play’ destination building in Birmingham with a complementary, ancillary retail and leisure offering,” he added in a statement.

The Mailbox’s new tenants include Lucarelli’s, a high-end Italian restaurant and bar, which has signed a 15-year lease at a prime canal-side location. Also on the canal will be Zizzi, which has inked a new 10-year lease. Four new 10-year leases have also been signed for units on Level-Two of the property.

In the update, Croft said the Mailbox’s rental collection figures have “remained robust” throughout the pandemic. “[The] repositioning of the property will ensure that it will be very well placed to further benefit from the expected recovery,” he added.

The Mailbox is a 680,000-square foot, office-led site that is independently valued at £179mln.

It is home to high-quality tenants such as the BBC, WSP, Harvey Nichols and Advanced Business System.

For the September quarter, the company has received 82.3% of contracted rent, including 100% it was due from office tenants and the car parking.

The real estate investment trust that will own the building is set to be the first listing on the IPSX.

Mailbox REIT is looking to raise £66mln at £1 a share when it lists next month, which would give it a market capitalisation of £119.5mln.

Post-IPO, the debt will be £70mln, giving gearing of 38%. M7 will be keeping a 45% stake in the business, meaning its and investors’ goals are completely aligned.

The offer closes at 11 am on December 8 with dealings commencing on December 14.

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