The West End of London Property Unit Trust ('WELPUT'), managed by Schroders and advised by Grafton Advisors, has exchanged contracts to buy the freehold interest in Buchanan House, 3 St. James's Square, London SW1, from clients of Aberdeen Asset Management for a total consideration of £66.375 million (approx. 82.14 million). The sale price reflects a net initial yield of 4.5% and a price per ft² of £1,228 (approx. 1,519).
Buchanan House is a prominent building on the north east corner of St James's Square providing 54,022 ft² (approx. 5,018 m²) of office accommodation over 10 floors. Winchester House Property Company Limited (a subsidiary of Diageo) has a lease on the entire building until June 2014 at a current passing rent of £3.1 million (approx. 3.8 million) per annum, equating to £57.82 (71.85) per ft² overall, but has fully sub-let the building in suites.
The transaction enables WELPUT to recycle capital into the core Mayfair/St James West End office market following the recent disposal of Stratton House in Mayfair for £166 (205) million at a 4.2% initial yield or £1,670 (2,065) per ft², which follows its successful redevelopment.
Nigel Kempner Head of Grafton Advisors, part of Quintain Estates and Development plc, said: "These recent transactions are in line with our strategy to crystallize profits and recycle capital into well located assets. Buchanan House offers us a range of options to apply our strong market knowledge and specialist management skills to identify ways in which to extract value for WELPUT investors out of its future management and refurbishment.
"We are excited to be back buying assets in the core West End market, which will complement the rest of the portfolio's focus on strong investment assets and short-term development/refurbishment opportunities. Furthermore, this is a building we used to own when Diageo had a much longer lease."
Aberdeen Asset Managers were represented by Strutt & Parker and WELPUT were advised by CBRE.
Source: FTI Consulting