10th Nov 2014 07:38
LONDON (Alliance News) - Great Portland Estates PLC Monday said it has exchanged contracts to sell its 151-year leasehold interest in 12/14 New Fetter Lane in London to TIAA Henderson Real Estate for GBP165.8 million, reflecting a yield of 4.5% and continuing its strategy of recycling capital out of assets.
The 142,500 square foot office development is under construction with practical completion expected in the fourth quarter of 2015. The scheme is fully pre-let to Bird & Bird LLP for 20.25 years from practical completion. Bird & Bird's gross rent is GBP8.28 million a year which reflects GBP58.11 per square foot.
TH Real Estate will fund all development costs up to a maximum of GBP165.8 million after it buys the development from Great Portland.
Great Portland said the site price will be GBP92.8 million assuming completion at December 1, 2014, which is GBP12.4 million or 15.5% ahead of its March 2014 valuation, adjusted for capital expenditure.
TH Real Estate will receive a deduction from the final price in lieu of interest on their capital outlay until practical completion at a rate of 4.5% a year. Based on the current cost and programme, Great Portland will also receive a final payment of GBP5.1 million on practical completion, it added.
"This sale continues our strategy of recycling capital out of assets, where we have created significant value and back into our exciting 2.2 million square foot development programme," Great Portland Chief Executive Toby Courtauld said.
"12/14 New Fetter Lane has been an exceptional project for us. Having secured an attractive planning permission, re-geared the headlease with the City Corporation and fully pre-let the building, this sale crystallises a return on capital since committing to the scheme of 82.7% and an unlevered internal rate of return of 55.1%," he added.
By Steve McGrath; [email protected]; @stevemcgrath1
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