The M&G Secured Property Income Fund has completed its on-off-on-again sale of advertising giant WPP's former offices at Dorland House in Paddington in London, for £63.5 million or a 6.39% net initial yield.
CBRE has advised on the Dorland House sale process over a two-year process, with the initial price sought set at £85 million reflecting a 4.55% net initial yield. Savills advised the private buyer.
The 85,457-square-foot office is on Westbourne Terrace less than 200 yards from Paddington station. It is single-let to WPP until 2035 at a rent of £48.35 per square foot. WPP vacated in 2021 and it was subsequently sublet to Future Publishing and the Secretary of State.
Occupancy is at 93.62% and the rent totals £4,006,881 per annum. It was on the market for 23 months.
The building has significant alternative use value, underpinned by a longer-term potential for residential, hotel or health.
The transaction comes as Savills reported that there were 14 transactions with a combined investment volume of £370 million in October, bringing year-to-date volumes to £3.24 billion. That figure reflects a 7% and 34% decline on the five- and ten-year averages, respectively, the adviser said in its West End investment watch.
It said it is tracking £399 million under offer, across 15 assets with 13 of these below £50 million and eight assets placed under offer in August or earlier. It does say there are "numerous" bid processes scheduled before year end, with £333 million of trade required to match 2023’s full-year volume.
The largest West End sale in October was Aviva and PSP’s freehold sale of 30 Golden Square, W1, to Legal & General for £72.25 million or a 4.49% net initial yield. The 32,500-square-foot office building is fully let.
Of the assets to formally come to market, among the most significant is AEW and Thor Equities’ marketing of their freehold interest in 100 New Oxford Street, WC1, a mixed-use building, seeking £140 million and a 5.53% yield.
In addition BC Partners is seeking a funding partner for 1 Museum Street, WC1, a consented £500 million 220,000-square-foot office-led development scheme, with offers invited on the basis of a joint venture or preferred equity position.
JLL has been appointed on the sale after a recent High Court ruling that upheld Camden Council’s planning permission for the development, as reported.