Derwent London has sold its long leasehold interest in The Copyright Building in west London to Union Investment Real Estate for £165m.
The sale price is adjusted to £148.7m net of top-ups relating to rent free periods and a rent guarantee on the vacant retail space. The building in Berners Street, is under construction and will comprise 87,150 sq ft of offices let to Capita Business Services for £7.4m a year and three retail units totalling 20,000 sq ft, which currently remain available to rent. The estimated rental value of the three retail units is £960,000.
Completion of the sale is expected in in the fourth quarter of this year, after the building has been completed. The disposal price represents a 4.2% initial yield to the purchaser.
Derwent acquired a 68-year leasehold interest in 25-27 and 29-33 Berners Street W1 in late 2012 for £36.5m. It subsequently regeared its headlease with the freeholder, The Berners-Allsop Estate, incorporating a third property, extending the lease to 127 years.
John Burns, chief executive of Derwent, said: “The disposal of The Copyright Building to this established international investor endorses the strength of the central London office investment market. Derwent London has over a third of its portfolio in Fitzrovia including its major 80 Charlotte Street development where we recently pre-let 42% of the office space. This transaction takes net sale proceeds to £670m over the past twelve months and, on average, 8% above the previous December book values.”
Martin Schellein, head of investment management Europe of Union Investment, said: “Fitzrovia is currently one of the most dynamic areas of London’s West End. Once completed, The Copyright Building will be one of the district’s highest-value office complexes and is let on a long-term basis to an office tenant with an excellent credit rating. As a result, this core investment is in line with the defensive strategy for expanding our portfolio in the UK and demonstrates that we are still pursuing attractive investment opportunities in the current market cycle.”
CBRE and Strutt & Parker acted for Derwent London and JLL acted for Union Investment.
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