The Carlyle Group and property investment and development company Skelton Group headed by Duncan Moss have announced their second acquisition in joint venture taking the total end day value of their development schemes to date to more than £120m.
The latest acquisition is a rare freehold 41,000 ft² Victorian building consisting mostly of office space on the corner of Grafton Street and Hay Hill in the heart of Mayfair in London. The building is 1-2 Grafton Street and 1-11 Hay Hill, London W1.
Initially developed in the 1860's, the building was formally granted office consent in 1975, with approximately 6,500 ft² of retail space on the ground and lower floor.
Like similar buildings in the area the block suffers from relatively poor gross to net ratio and the investment provides only 26,648 sq ft of total lettable space, including the retail accommodation. Currently it generates a total gross rental income of approximately £1m annually. Virtually all the leases will expire during the course of 2007.
Following completion of the redevelopment Skelton and Carlyle believe the fully let investment would have a value of approximately £55m.
Skelton and Carlyle intend to redevelop the entire block to provide more efficient Grade A office accommodation over five floors with a similar amount of retail accommodation as currently exists, subject to planning permission.
In October, Skelton and Carlyle acquired a 58,000 sq ft office building close to Waterloo Station from the Church Missionary Trust Association. Occupying a 0.57acre site on Waterloo Road SE1, only 300 metres from the mainline station, it is fully rent producing.
The partners aim to develop the site over the next few years into hotels, subject to planning consent. Plans have been drawn up to redevelop the site into two hotels, totalling 460 rooms, and it is anticipated the scheme would have a development value of £65m.
Source: The Carlyle Group