Derwent London today announced that it has entered into non-binding heads of terms to sell its 50% interest in 1-5 Grosvenor Place SW1 to Peninsula Hotels for £132.5 million (approx. €154.5 million) before costs. As at December 31, 2012 the Group’s interest was valued at £78 million. The proposed transaction reflects a 70% premium to that valuation.
The existing properties comprise mainly offices and extend to 168,000 ft² (approx. 15,600 m²), net, at Hyde Park Corner, Belgravia.
In 2012, Derwent London and Grosvenor, the freeholder of 1-5 Grosvenor Place, restructured their interests and established a joint venture. Under that agreement Derwent London’s leases, which were due to expire in 2063 and 2084, were restructured onto a 150-year term. Simultaneously the Group sold 50% of its ownership to Grosvenor for £67.3 million (approx. €78.4 million).
On completion of the proposed transaction with Peninsula Hotels, Derwent London will have received proceeds of almost £200 million from 1-5 Grosvenor Place since the start of 2012.
It is intended that, following the disposal of Derwent London’s interest, Peninsula Hotels and Grosvenor will work together towards redevelopment of the site as a hotel and residential scheme.
The heads of terms entered into with Peninsula Hotels are not legally binding and consequently the sale may or may not proceed.
John Burns, Chief Executive Officer at Derwent London, commented: “These heads of terms move Derwent London towards securing most of our anticipated gain from the redevelopment of 1-5 Grosvenor Place. The Group will receive the proceeds five to six years ahead of the expected completion date for the scheme and continues to invest in other opportunities, principally its extensive development pipeline which amounts to over 2.5 million ft² of space that could potentially be delivered before 2020.”
Source: Derwent London