British Land has announced it has exchanged upon the sale of a 75% interest in a portfolio of three buildings in the West End to Allianz Real Estate, acting on behalf of several Allianz Group companies, for £401m. The transaction represents a blended net initial yield of 4.32%, a premium to September book value and is expected to complete in January.
Simon Carter, Chief Executive, British Land, said:
“Having delivered outstanding office space and attracted high quality occupiers, we are thrilled to have secured Allianz Real Estate as our partner and crystallised significant value for shareholders. This transaction demonstrates that like us, investors remain confident in the long term prospects for high quality assets in prime London locations.”
Kari Pitkin, Head of Business Development for Europe at Allianz Real Estate, said:
“We are delighted to be working with such a respected partner in British Land. This transaction represents a great opportunity to invest in prime assets in a global city on behalf of our Allianz clients thereby broadening our UK investment portfolio.“
British Land will form a new joint venture with Allianz, with British Land’s interest at 25% and Allianz’s at 75%. British Land will continue to manage all three buildings and will receive an asset management fee.
The portfolio includes three buildings, 10 Portman Square, Marble Arch House and York House, all of which are in Marylebone. 10 Portman Square comprises 134,000 sq ft of high quality, multi-let office space on Portman Square. Marble Arch House is a 76,000 sq ft office-led building close to Marble Arch station and opposite York House, which is 100,000 sq ft of primarily office space with 22 residential apartments.
The assets had a combined valuation of £508m (at 100%) at 30 September and the total net rent attributable is £21.1m. Prior to any reinvestment the transaction will reduce underlying earnings per share by around 1.4p and LTV by 2.7%.