The First and Second Swedish National Pension Funds' joint venture for European property investment, the Cityhold Property AB group, has completed acquisition of a 260,569 ft² (approx. 24,000 m²) (net lettable area) freehold office building at 1 Kingdom Street, Paddington, London, W2.
1 Kingdom Street, Paddington.
The property is located within Central London close to Paddington main line station. The headquarters office building was developed and owned by a joint venture between Aviva Investors and Union Investment Real Estate GmbH. The average unexpired term certain exceeds 11.5 years and the building houses several high profile tenants, such as Vodafone, Statoil and Misys Plc.
"We are delighted to announce our first acquisition in London. It is a new high quality property which provides an excellent long-term stable income stream from blue-chip tenants. This is an excellent fit with Cityhold's investment strategy," says Per Sjöberg, CEO of Cityhold.
The purchase price is £230 million (278.3 million), which reflects a net initial yield of just below 6% after full purchaser's cost. The pension funds provide initial funding for the acquisition, which will be partly replaced by third party finance in early 2012. Contracts were exchanged on December 30, 2011.
"The property has excellent environmental credentials and we believe that the future Paddington Crossrail link will drive further positive rental uplift to this investment in the future. We are also very pleased with the yield this property is generating," says Rickard Backlund, Executive Chairman of Cityhold.
Neil McLeod, Fund Manager at Aviva Investors comments, "The caliber of tenants secured in 2008 demonstrates the strength of the Paddington Central scheme where we have been the dominant investors since development commenced in 2000. The sale of this building enables us to recycle some of the proceeds into the two remaining plots, 4 and 5 Kingdom Street, where planning consent was secured earlier this year."
Jones Lang LaSalle was Cityhold's advisor in the acquisition. The vendors were represented by CBRE and Savills.