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Hammerson form JV with Canadians to buy Lloyds Banking Group HQ for £183 million
Hammerson has set up a joint venture with the Canada Pension Plan Investment Board (CPPIB) to acquire a long leasehold interest in 10 Gresham Street, a prime office building in the City of London, for £183 million including costs of £8 million. The vendor is Union Investment, a German fund. Hammerson will have a 30% interest in the joint venture and will manage the asset on its behalf. Hammerson's total commitment is £55 million.
10 Gresham Street comprises 24,125 m² (260,000 ft²) of high quality offices, retail and ancillary accommodation over eight floors. The building was designed by Foster + Partners and completed in 2003. The principal occupier is Lloyds TSB Bank, with the remainder of the building let to seven other tenants including Milbank Tweed Hadley & McCloy and JC Flowers. Total rents passing, net of head rent payable, are £10.7 million p.a. Average headline rents are £44 per ft² and the average unexpired lease term is around 11 years (9 years factoring in tenant break options).
The yield in the deal is a relatively low 5.85%, but Hammerson presumeably feel that the income from the asset management and the opportunity to improve the income make the deal worthwhile.
David Atkins, Chief Executive of Hammerson said:
"We are very pleased to again be partnering with CPPIB. This acquisition is in line with our strategy to capitalise on attractive opportunities in the London office market. Given the existing lease profile and relatively low rental base this offers an excellent opportunity for us to increase value by using our asset management skills."
10 Gresham Street comprises 24,125 m² (260,000 ft²) of high quality offices, retail and ancillary accommodation over eight floors. The building was designed by Foster + Partners and completed in 2003. The principal occupier is Lloyds TSB Bank, with the remainder of the building let to seven other tenants including Milbank Tweed Hadley & McCloy and JC Flowers. Total rents passing, net of head rent payable, are £10.7 million p.a. Average headline rents are £44 per ft² and the average unexpired lease term is around 11 years (9 years factoring in tenant break options).
The yield in the deal is a relatively low 5.85%, but Hammerson presumeably feel that the income from the asset management and the opportunity to improve the income make the deal worthwhile.
David Atkins, Chief Executive of Hammerson said:
"We are very pleased to again be partnering with CPPIB. This acquisition is in line with our strategy to capitalise on attractive opportunities in the London office market. Given the existing lease profile and relatively low rental base this offers an excellent opportunity for us to increase value by using our asset management skills."
Wed, 4th Aug 2010