MGPA acquires Harbour Exchange in Canary Wharf for €161.9 million from Hammerson (UK)

MGPA, the private equity real estate investment advisory company, announced that it has exchanged contracts for the acquisition of Exchange Tower, Harbour Exchange, Docklands London E14, for £134.6 million (€161.9 million) from Hammerson plc. Completion is targeted for September.


The building (not pictured) comprises 45,000 m² of office space.

The acquisition is on behalf of MGPA Europe Fund III (the "Fund"), part of the larger MGPA Global Fund III, which closed in June 2008 with commitments of US$5.2 billion to invest across Europe and Asia.

The 16 story office tower at 1&2 Harbour Exchange was originally acquired by Hammerson in 1999 for a consideration of £77 million. The building comprises 45,000 m² of office space let to a range of tenants. At 31 December 2009 Harbour Exchange was valued at £131 million and had passing rents of £10.7 million.

The net yield is 8.1% off a contracted rent of £11.1 million and the weighted average lease expiry is 4 years. The property is let to 30 principal tenants at an average passing rent of £24 per ft² with 49% secured by the UK government and Barclays plc. The buildings have flexible 15,000 ft² floorplates which can be readily subdivided into three tenancies and most floors have panoramic views. The estate also has the potential for high density residential development in the future.

MGPA's Head of UK Acquisitions, Hamish MacDonald said, "The UK is a key market for the Fund. Exchange Tower is the Fund's second investment in the UK after Lands Improvement Holdings plc, the once-listed land development company that was acquired in December 2009. We are positive about rental growth prospects for the Central London office market due to the lack of supply available from the previous cycle and the constrained immediate development pipeline. In Exchange Tower, the Fund has acquired a good quality, multi-let office building at a capital value below reinstatement cost and in a highly supply constrained sub-market. The asset provides a range of office solutions (suites to multiple floors) offering best value for money to tenants seeking proximity to the Canary Wharf Estate. Our highly experienced asset management team will make the most of the opportunity to lease vacant space and restructure leases into the recovering Central London office market."

David Atkins, Chief Executive of Hammerson, said: "Harbour Exchange has been a good investment for the company over the last decade. However, I believe the capital can be better deployed in other opportunities. Our recent transactions, including the acquisitions of Leadenhall Court and Battery retail park, and the part-disposal of Espace Saint Quentin, should improve the prospects for future growth from our portfolio whilst overall releasing capital."

Source: Hammerson / Citigate

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