16th Nov 2016 07:55
LONDON (Alliance News) - Great Portland Estates PLC on Wednesday said it has sold the freehold of a property located on London's Oxford Street to Norges Bank Real Estate Management for GBP276.5 million.
The property developer said the sale price reflects a net initial yield to the buyer of 3.2%, with the office and retail development currently under construction. Completion is expected in the second quarter of 2017.
The scheme is located at 73/89 Oxford Street and 1 Dean Street and is pre-let to fashion retailers New Look Retailers Ltd and Benetton Group Srl, and price comparison company Moneysupermarket.com Group PLC, on a weighted average unexpired lease term of 10.7 years.
Great Portland Estates said the rent on completion will be GBP9.7 million per annum.
Norges Bank has paid GBP205.2 million for the site, with the balance of the purchase price payable on completion of the leases following practical completion. The price Norges Bank will pay allows for the deduction in lieu of interest on their initial capital outlay until practical completion at a rate of 3.2% per annum and an allowance for tenant rent free periods.
Based on the current cost and programme, Great Portland Estates said it will receive two further payments on completion of the leases in July 2017 of GBP46.2 million in deferred consideration and GBP25.1 million for reimbursement of the development costs to complete the scheme.
"Oxford Street has been an exceptional project for us and this sale continues our strategy of recycling capital out of assets where we have created significant value," said Great Portland Estates CEO Toby Courtauld.
"Having secured an attractive planning permission, pre-let the building and enhanced our interest through the purchase of the freehold earlier this year, this sale crystallises a whole life capital return of 75% and an annualised unlevered internal rate of return of 28.4%," Courtauld added.
By Hannah Boland; [email protected]; @Hannaheboland
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