The West End market is proving particularly active as close to £2 billion of central London office sales are close to going under offer or completing.
News that private equity giant Blackstone is in talks to buy 130-134 New Bond Street, an office and retail block on London's most exclusive shopping street, from Canada's Oxford Properties and Swiss luxury goods group Richemont for about £230 million, is the clear banner deal for a flurry of activity lifting hopes for recovery.
A price of £230 million would represent a circa 3.5% yield, but Blackstone sees the possibility of strong returns given the opportunity to repurpose the space for a major flagship luxury brand.
The 27,657-square-foot block fronts New Bond Street and Grosvenor Street and is home to retailers Breitling, the luxury watch group, and Smythson, the stationery group. Office tenants include Newmark, APAM and Hilco.
A number of other large transactions are progressing.
Nomura is set to buy 55 St James's Street from Lothbury for £64 million. The Japanese bank owns a 75% stake in Lothbury Investment Management. Michael Elliott has been advising Lothbury on the sale of the corner building, which was redeveloped in 2015 and comprises 28,232 square feet of Grade A office, retail and residential accommodation. The commercial element has a weighted average unexpired lease term of 4.10 years to expiry. Tenants at the building include Aermont Capital, Ferrexpo, Alberto Capital and the Portland Gallery.
Abrdn has sold 34 Foubert's Place to Bywater in joint venture with Japan's Sumitomo Corporation for £22 million, reflecting a 4.63% yield. It is the third acquisition for a new fund following the recent acquisition of 123 Golden Lane. Hanover Green advised Bywater; JLL advised Abrdn.
CBRE Investors, on behalf of the City of Wolverhampton Council, has sold Hammer House at 113-117 Wardour Street to a private European investor for £18.75 million or a 5.2% net initial yield. Hanover Green advised CBRE Investors on the sale of the 15,384-square-foot office art deco block leased to tenants including the PHA Group and Open Mike Productions.
Separately, 14 Conduit Street is being sold by Trophaeum, advised by Michael Elliott, for around £37 million or a 4.65% net initial yield to a private Spanish investor rumoured to be Zima Capital. Tenants at the 15,000-square-foot building include QTS Europe. CBRE is thought to be advising the buyer.
Helical has exchanged on the sale of the long leasehold interest in 25 Charterhouse Square, London, EC1 to a real estate fund managed by global alternative investment manager Ares Management for £43.5 million.
The disposal price for the 45,000-square-foot office represents a 6.5% discount to the 30 September 2023 book value, Helical said in a statement.
Ares is also in talks to buy a slice of Shaftesbury's Charlotte Street portfolio for £65 million. Shaftesbury dropped plans to sell a larger £250 million tranche of its Fitzrovia portfolio last year. JLL is advising Ares while CBRE is advising Shaftesbury. Ares Management will buy the majority of the REIT’s holdings in the Fitzrovia area. React News first reported on the talks.
The assets are spread across Charlotte Street and Goodge Street and are predominantly independent restaurants, cafés, pubs and bars, plus some office space. The transaction includes around 100,000 square feet of assets comprising 11 offices, seven stores, 28 hospitality and leisure outlets, and 56 residential apartments.
Finally, Greycoat is in talks to buy three West End and City assets, 77 Kingsway, 120 Aldersgate and 55 Strandm for around £75 million in total. React News first reported on the talks.
In the City, Indonesian investor Sinar Mas Land, had gone under offer to buy 20 Old Bailey from Korean global mutual investment fund Mirae Asset Global Investments for around £240 million, but Mirae has now decided to withdraw the asset and pursue a refinancing in expectation of selling into an improved market.
The Korean investor bought the 247,000-square-foot building in 2018 for around £340 million. Mirae is being advised by Cushman & Wakefield and Sinar Mas by JLL.
An Israeli investor is also finalising a deal to buy 5 Churchill Place, the former headquarters of collapsed investment bank Bear Stearns in Canary Wharf, with market sources suggesting a price of around £110 million. Savills is marketing the 12-storey office block on behalf of receivers from FTI Consulting, which had taken over the property from Chinese investment firm Cheung Kei Group.
Speaking to CoStar News at the Mipim conference in Cannes, Ben Cook, Cushman & Wakefield's head of City of London capital markets, said a flurry of deals are definitely coming but not necessarily quickly enough to make the first quarter look strong: "In 2023, investors were focused on when the bottom of the London market would be reached. This has changed completely in 2024 with investor confidence returning faster to London than in many other global gateway cities, and buyers now seeking to place capital into London whilst there remains an opportunity to purchase attractive assets at cycle-low pricing.
"The inherent attractions of London also mean that buyer sources remain extremely diverse. Domestic investors dominated the market last year, but we continue to see a wide range of purchasers from Europe, Asia, the Middle East" with a number of United States investors also returning.
"The positive investor activity in the market today is more accurately indicated by the £2 billion-plus of transactions that are now under offer across Central London.”