(This story has been updated to include the buyer of the portfolio.)
British Land has exchanged to sell a portfolio of data centres and offices in London for £125 million and lined up another 1.1 million square feet of lettings across its portfolio.
In an upbeat operational update ahead of its half-year results on 13 November, BL said that after securing 1.2 million square feet of leasing across the portfolio in the first five months to 31 August 2023, 13.1% ahead of estimated rental value, it now has a further 1.1 million square feet under offer, 17.4% ahead of ERV.
It confirmed that it has exchanged on the sale of an office and data centre portfolio for £125 million, a net initial yield of 4.6%, to deliver an internal rate of return of 8.2% per annum since acquisition in 2007.
It declined to comment further but CoStar News understands that ICG, the global alternative asset manager based in London, has bought the portfolio of six London-based data centres and offices leased to Vodafone which BL has been marketing via Savills.
The Vodafone portfolio totals 260,000 square feet of space let to Vodafone Enterprise UK on leases that all expire in April 2032, providing a total passing rent of £6.1 million a year, equating to £23.50 per square foot.
At its campuses developments, BL says 262,000 square feet of leasing has completed 8.2% ahead of ERV, including 64,000 square feet of Storey, its flexible workspaces platform, leasing, and a further 137,000 square feet under offer, 10.5% ahead of ERV. In addition, it has 1.7 million square feet in negotiations as "demand continues to gravitate to best in class space", it said.
BL said Facebook parent Meta had now surrendered its lease at 1 Triton Square, one of the two buildings it has leased at Regent's Place, for £149 million, received on 25 September 2023. It said, while this will result in an earnings per share dilution, post interest savings, of around 0.6p for the six months to March full year 2024, it is comfortable with current market expectations for the financial year due to "better collection of historic COVID arrears than anticipated".
Meta had originally been thought to have been looking to sublet the space after confirming it would not be moving in as part of a global scale back of its office space last year.
BNP Paribas Real Estate analysts were reported in the Financial Times today as estimating that BL had another 18 years on its lease and paid the equivalent of around seven years of rent to exit its obligation. BNP PRE argues British Land could now relet the property at a higher rent.
In retail, 980,000 square feet of leasing has completed, 15% ahead of ERV, with a further 951,000 square feet under offer, 19.4% ahead of ERV. This includes 511,000 square feet of deals across retail parks, 15.3% ahead of ERV and 677,000 square feet under offer at 19.4% above ERV.
It recently upgraded retail park ERV growth guidance for full year 2024 from 2-4% to 3-5% as a result of strong leasing activity ahead of ERV.
As a result of the Meta surrender and the disposal of the office and data centre portfolio, March 2023 loan to value is at 36% and on a pro-forma basis would be 33.6%.
In August, Fitch affirmed British Land's senior unsecured credit rating at 'A' with Stable Outlook.
BL flagged strong liquidity , with £1.7 billion of undrawn facilities and cash, with no requirement to refinance until early 2026.
Simon Carter, CEO, said in a statement with the filing: "Operationally we are seeing strong leasing activity which reflects the exceptional quality of our portfolio and has resulted in our recent upgrade of the expected ERV growth in retail parks. We have also strengthened our balance sheet in the period and continue to actively recycle capital with the disposal of non-core assets ahead of book value.
"Meta's surrender of our building at 1 Triton Square also enables us to accelerate our plans to reposition Regent's Place as London's premier Innovation and Life Sciences campus."