Hammerson plc has acquired a 999-year leasehold (virtual freehold) interest in 99 Bishopsgate, London EC2, from PRUPIM acting on behalf of the Prudential Assurance Company Ltd for £100 million (approx. 113 million), including costs.
99 Bishopsgate is a 26-story tower providing 31,500 m² of office accommodation in the center of the City of London. It is occupied by a number of financial and professional services companies including: Deutsche Bank, Latham & Watkins, Korea Development Bank and Charles River Associates International.
Hammerson has owned a long leasehold interest in the property, which expires in 2100, since its reconstruction in 1994. The rent payable to Prudential was £4.2 million per annum. Net of headrent, Hammerson's passing rents at December 31, 2010 were £13.6 million, and at that time Hammerson's interest was valued at £126 million.
Deutsche Bank is expected to vacate the majority of its space later this year. Hammerson intends subsequently to refurbish approximately 13,500 m² of the office space ready for occupation in 2012, during a period of expected undersupply.
David Atkins, Chief Executive said: "This freehold acquisition further increases our exposure to the City of London office market whilst improving asset liquidity and expected returns.
"99 Bishopsgate is an excellent building which has consistently achieved peak City rents. We have an exciting business plan for the property and ownership of the merged interest will ensure that we maximize returns to shareholders from this investment."