Mitsubishi Estate Company (MEC) today announced it has sold King Edward Court, 10 Paternoster Square, London, EC4 to Oxford Properties, the real estate arm of the OMERS Worldwide Group of companies, for £235 million (approx. €279.3 million) reflecting an initial yield of 5.3%.
King Edward Court, the 246,000ft² (approx. 22,854 m²) headquarters of the London Stock Exchange designed by Eric Parry Architects and Sheppard Robson was completed in 2003 as part of the Japanese developer’s landmark Paternoster Square development surrounding St. Paul’s Cathedral.
The principal tenant of the 211,000 ft² (19,600 m²) office element is the London Stock Exchange on a lease which expires in September 2028. Subtenants include Portuguese bank Grupo Banco Espirito Santo and Numis Securities. Retail tenants occupying 22,000 ft² (approx. 2,043 m²), include Sainsbury’s Local, Pret A Manger, Corney & Barrow, Jeeves of Belgravia, Boots and The Whiskey Shop.
MEC's UK managing director, Hiroyuki Arimura said: “MEC is particularly proud to have developed Paternoster Square which has delivered a superlative office-led mixed-use scheme and a handsome public realm on a very challenging site.
“The enhanced return from this disposal has vindicated our long term approach to investing and developing real estate in the UK. Our continued relationship with the development will remain through our ownership of Warwick Court at Paternoster, which is leased to Goldman Sachs.”
Paul Brundage, Executive Vice President, Senior Managing Director, Oxford Properties Europe commented on the purchase: “This a key strategic acquisition for us; the prime City core location of Paternoster Square, coupled with the strength of LSE’s lease covenant will deliver secure risk adjusted returns in line with our investment objectives. As an asset, King Edward Court is also a direct complement to our existing development and investment portfolio, which includes St. Martin’s Court.”
The acquisition of King Edward Court comes as Oxford makes its mark on its existing holdings at Paternoster Square. Oxford has completed a surrender and new 15-year lease with food retailer Coco Di Mama for a 1,184 ft² (approx. 110 m²) unit at St Martins Court, at a rent of £65,000 (€77,200) p/a. This letting provides quality and variety to the office occupiers and ensures the Oxford building remains 100% let.
Proceeds of the sale will be re-circulated into MEC’s new and existing UK investment and development pipeline.
In September MEC takes control of its River Plate House site at 7-11 Finsbury Circus, London, EC2 where it will begin work on a 249,000 ft² (23,130 m²) state-of-the-art City office development.
MEC was advised by Cushman & Wakefield and CBRE advised Oxford on the acquisition.