PRUPIM has acquired 62 Park Street, the prominent HSBC office building located on the River Thames next to Tate Modern, in a £103.25-million (c. €138m) sale-and-lease-back deal. The building, which has been let back to HSBC Bank plc for a further 20 years on an annually indexed lease, comprises more than 160,000 ft² of newly refurbished office accommodation, which is set over six floors. PRUPIM purchased the building on behalf of one of its annuity funds, Prudential Retirement Income Limited, for an initial yield of 4.72%.
62 Park Street is a highly recognizable building on the south side of the River Thames surrounded by a number of landmarks including Tate Modern, The Millennium Bridge, The Globe Theatre and Borough Market.
Steffan Francis, PRUPIM's Director of Institutional Funds, commented, "The size and scale of PRUPIM's real estate investment activity enables us to access and agree opportunities quickly. In this case, we have been able to secure another property that not only has a steadily growing long-term income stream backed by a very strong covenant, but also has wide ranging potential in the long term.
"HSBC is an internationally renowned diversified financial institution. Both Prudential Retirement Income Limited and Prudential Annuities Limited have a strong appetite to invest further in properties with equally strong long-term cash flows."
Following the record-breaking sale and leaseback of HSBC's headquarters building in the UK to Metrovacesa earlier this year, this latest deal again demonstrates HSBC's strategy of regularly reviewing Group properties with significant market values globally against the available market opportunities.
Vivienne Grafton, Head of Property for HSBC in the UK, added, "This is a good opportunity for HSBC to manage its property assets effectively in order to improve efficiency and flexibility, and we're pleased to do so in collaboration with respected real estate investor, PRUPIM."
Southwark has become an increasingly prominent office location as a consequence of the recent improvements to the Jubilee Line underground service, now connecting Bond Street to the west and Canary Wharf to the east.
Catella acted for PRUPIM and CBRE acted for HSBC Bank plc.