Great Portland Estates plc (GPE) announces three disposals north of Oxford Street for a total consideration of £33.1 million, 22.5% higher than their September 2005 book value (adjusted for capital expenditure).
At 60/62 Margaret Street, W1, GPE has forward sold its long leasehold interest in this 20,100 sq ft office and showroom refurbishment to clients of Arlington Property Investors for 12.7 million. Purchased by the Group in January 2005 for 6.1 million including costs, the property is currently vacant and will be fully refurbished by GPE under a development agreement with the purchaser for a total further cost of approximately 3.5 million. Whilst construction cost risk remains with GPE, all other risks, including void and letting risk have been transferred to the purchaser. The Groups analysis of the purchase price assumes a letting at 42.50 per sq ft on the office space, a blended exit yield of 5% and completion of the refurbishment works by December 2006.
At Evelyn House, 142/144 New Cavendish Street, W1, contracts have been exchanged to sell this 11,700 sq ft four storey office and showroom property for 5.8 million, 22.5% ahead of the September valuation. The basement, ground and first floors are vacant and the second to fourth floors are let on three leases all expiring in June 2010 with tenants break options in June 2007. The property currently produces a total rent of 172,500 per annum, representing a net initial yield of 2.8%.
At 22/28 Eastcastle Street, W1, GPE has sold four adjoining showroom and office properties, totaling 33,000 sq ft for 14.6 million, reflecting a net initial yield of 2.1%. The properties are multi-let to ten tenants on leases with an average unexpired lease term of under 1.5 years and there is around 16,300 sq ft of vacant space. The price paid reflects a 23.7% premium to the September 2005 valuation.
Both Evelyn House and the Eastcastle Street properties were held by the group primarily as potential residential conversions to satisfy planning agreements with the local planning authorities. Since planning consents have now been obtained for all the groups major office developments north of Oxford Street (190 Great Portland Street, Knighton House and the Titchmor development) this residential currency was no longer required.
Commenting on the transactions, Toby Courtauld, GPEs Chief Executive said, This is good business for GPE. Having executed our strategies for these properties and following the strong yield compression we have seen over the past six months, we can now recycle the capital to better use elsewhere.