Great Portland Estates plc ('GPE') has exchanged contracts to sell its leasehold interest in Clarendon House, 17/18 New Bond Street, London W1 for £50 million to a private purchaser.
The property was constructed in 1996 and acquired by GPE through its acquisition of Ilex Limited in 1997. It provides approximately 34,800 sq ft of accommodation, comprising a retail store of 12,700 sq ft let to LVMH Fashion Group UK Limited and multi-let offices of 22,100 sq ft above. Net of the 15% ground rent payable to freeholder, the Pollen Estate, the property produces an income of £2.4 million per annum.
The sale will produce a profit of £6.5 million, net of costs, over the book value at 31 March 2004 and the proceeds will be used for general corporate purposes.
GPE also announces that it has commenced work on its remodeling of the entrance and office space at Bond Street House. Following the negotiated surrender of three principal leases, the 12,000 sq ft refurbishment is expected to be completed by the end of 2005, two years earlier than originally planned. The project will deliver high quality offices with a rental value of £55 per sq ft, up from the current rental value of £32.50 per sq ft.
Toby Courtauld, Chief Executive of GPE said: 'Clarendon House has benefited from significant rental value growth over the past 6 months, due primarily to our letting to Mappin & Webb at Bond Street House, our holding opposite, where we set a new rental tone of £500 Zone A. We have also seen yields harden recently, due in part to the significant weight of private capital chasing trophy buildings. The purchaser´s initial yield for this geared leasehold building is approximately 4.5% net of costs and, having created value through our asset management activity on New Bond Street, we believe the time is right to crystallise our efforts and use the proceeds more profitably elsewhere'.
The Great Victoria Partnership, a joint venture between Great Portland Estates and Liverpool Victoria Friendly Society, has bought the Mount Royal Block at 508-540 Oxford Street from Quintain for a total of £80m.
The property generates a net income of £3.7m per annum, and has been sold at its last reported book value. The deal represents an initial yield of just over 4.6%.
Quintain Chief Operating Officer, James Hamilton Stubber, commented: “The sale of the Mount Royal interest follows our strategy of reconfiguring our core portfolio in order to reinvest in assets with higher income returns, complementing the activity within out Special Projects business.”
Source: GPE/ Freeman News