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February 24, 2017
5 Of The Largest Commercial Property Sales of The Year So Far
£435m || 419,700sqft || 4.25% Yield
Rathbone Square, via burofour.com
The most expensive sale of 2017 so far saw Great Portland Estates sell the freehold of Rathbone Square in Fitzrovia. The mixed-use development, which is due to complete in March this year, was sold to Rathbone Place Jersey Limited – an entity owned by Gesellschaft Für Investmentfonds and Deka Immobilien Investment. The site sold for £435m, reflecting a net initial yield of 4.25%. The entire office portion of the site, totalling 242,800sqft, is let to Facebook on 15-year leases at an intial rent of £17.8m per annum (£73.31psf). 139 of the 142 private residential units had already been exchanged on 999 year leases at the time of sale, taking the total receipts to £655m for Great Portland Estates, who have proposed to return the profit of £110m to shareholders.
Principal Place (50% Stake)
£382m || 621,000sqft || 4.00% Yield
Antirion SGR have entered into a joint venture for Principal Place in Shoreditch. The Italian fund manager will pay £382m for a 50% stake in the development, equivalent to a net initial yield of 4.00%. The development is located on Worship Street, within close walking distance of Shoreditch High Street, Old Street Roundabout and Liverpool Street stations. Amazon, the US online retailer, has agreed to lease around 514,000 sq ft (82%) of the 621,000s sq ft office building and will be taking occupation from Summer 2017 at a rent reported as around £50 per sq ft. The mixed-use complex will also feature a 50-storey residential tower, 20,000 s ft of retail space and a half-acre central piazza. Principal Place was part of a portfolio bought from Hammerson for £518m in 2012.
One Kingdom Street
£292m || 264,898sqft || 4.86% Yield
One Kingdom Street
A Hong Kong investment vehicle owned by Cheung Chung-Kiu, has bought One Kingdom Street for £292m in January, at a net yield of 4.86%. The 264,898sqft Grade A office building is spread over 9 floors and located in Paddington Central. It was completed in February 2008, and has tenants including Vodafone, Shire, Mysis and Statoil with an average passing rent of £55psf. The property is being sold by Cityhold Property who bought the property in December 2011 for £230m, reflecting a net initial yield of 6.00%. The sale price represents a 26.96% increase over the past six years. Media reported last month that the buyer, CC Land Holdings, was also looking at buying a 50% stake in the landmark “Cheesegrater Building” from British land for around £500m.
7-8 St James’s Square
£246m || 92,200qft || 3.69% Yield
St James’s Square
Stanley Ho’s Shun Tak Group bought 7-8 St James’s Square last month, paying £245.9m for two properties totalling 92,200sqft. This represents a capital value a yield of 3.69% on 8 St James’s Square, which holds the record for the highest rent per square foot in London. This was set when Helly Nahmad Gallery signed a 15-year lease for 2,959sqft of 6th Floor office space at £185psf in April 2015. Société Générale also paid the highest office rent of 2016 at the building, when they expanded their presence at 8 St Jame’s Square to 18,029sqft by leasing a further 10,141sqft of fourth floor office space at £150psf. Other tenants at the property also include The Clubhouse, DHB Bank, and Point72 Asset Management. The sale reflects a total capital value of £2,667psf.
Whitefriars (Under Offer)
£155m || 228,789sqft || 5.75% Yield
The Freshfields Bruckhaus Deringer headquarters at 65 Fleet Street is reportedly under offer from Hong Kong-based private equity firm Joint Treasure, for a fee of £155m. This reflects a 5.75% net initial yield on the Whitefriars block. Freshfields, a magic circle law firm, recently signed a 20-year lease to move its headquarters to 100 Bishopsgate when its current lease expires in August 2021, where it will occupy 255,000sqft across floors 30-32 of the 37-storey tower. The total passing rent on the property is currently just over £9m (£39.42psf), with a rent review due in June 2019. Three retail units totalling 3,218 sq ft are let to Home Sweet Home Furniture Ltd, Eye Place (Fleet Street) Ltd and Arsland (UK) ltd, while a further 804 sq ft unit is let to Freshfields. Cushman & Wakefield had been marketing the property for £177.8m.