Legal & General Property has acquired the freehold interest of No 4 The Square, Stockley Park, on behalf of its Linked Pensions Fund from Ropemaker Properties, the property holding company of BP Pension Fund. LGP purchased the asset for £26 million (approx. 29.1 mln.), representing a net initial yield of 8.76%.
The property provides 7,560 m² of Grade A office space.
Built in 1999, the property provides 81,403 ft² (7,563 m²) of Grade A office space, arranged over ground and three upper floors, together with 356 car parking spaces within a landscaped site. Situated within The Square, the building forms part of the most recent phase of development on the park, comprizing six buildings, and offers highly specified accommodation.
The property is let to Cisco Systems Limited, with a guarantee from the US parent company, Cisco Systems Inc. for a term of 25 years, expiring in September 2024, subject to a tenant's break option in 2014. The current rent is £2,408,700 per annum, which equates to £318.54 per m² (£29.58 per ft²) overall, and it is subject to five yearly upward only rent reviews. Cisco Systems has sublet over 80% of the building to three sub-tenants, Rackspace, Perot Systems and Almirall, with the total passing rent of the sub-tenancies equating to £1,962,657 per annum.
Michael Barrie, Director of Balanced Funds at Legal & General Property, comments: "The key to securing good assets remains the ability to act quickly and in this instance we successfully closed this deal in just nine days. The transaction provides a high quality asset with the opportunity to add value over the medium term, by way of regearing the under leases and potentially securing new tenants as the occupational market improves. Stockley Park represents a premier office scheme, situated in an excellent strategic location, and therefore it is felt that the long term demand for the park will be maintained, within which No 4 The Square maintains a prime position."
Angus Minford, Investment Partner, King Sturge, comments: "Our client received strong interest from a variety of sources in this asset. This demonstrates the growing strength of demand amongst investors for quality, south east offices with five years plus unexpired lease terms".
King Sturge advised Ropemaker Properties and Knight Frank represented LGP.