(This article has been updated to include advisers.)
BlackRock Investment Management has exchanged to sell Watling House at 33 Cannon Street, EC4, for around £71 million, a circa 6% net initial yield.
The 94,489-square-foot office has a weighted average unexpired lease term of around three years and a passing rent of £48.86 per square foot. Tenants include The Arch Company, the joint venture between Blackstone and Telereal Trillium that became the UK's largest small-business landlord when it bought government owned railways operator Network Rail's commercial real estate in 2019, and Belgian financial services company Euroclear.
The purchaser is Goldstone Commercial, advised by Colliers, on behalf of a Hong Kong client while CBRE is advising BlackRock.
BlackRock bought the long leasehold interest in the building in 2014 from the-then Aberdeen Asset Management for £69 million.
Completion of the sale will boost a City market that has had a lack of recent new sales. Savills reports in its most recent City Market Watch that seven assets totalling £304 million were launched in June and just £1.25 billion of sales in the first six months of 2023, highlighting the "unwillingness of owners to launch properties in challenging market conditions".
According to CoStar's data second quarter office investment in the City came in at £400 million, 70% down from the first quarter and a quarter of the 10-year average.
But the recent sale and financing of Lion Plaza for £209 million alongside the sale of Watling House suggests a pick-up in activity.
Mark Stansfield, head of UK analytics at CoStar, said: "It was been a very quiet year so far for City office investment but especially in the £50 million to £100 million price range. Indeed, the Watling House deal is the first in this price bracket since May 2022, when 120 Old Broad Street sold for £50 million at a 5.2% yield.
"As a point of comparison, there were 14 such transactions in 2019 and 11 in a lockdown blighted 2020. This segment of the market – where the buildings are generally not trophy assets, and thus more susceptible to occupier flight, and where buyers often rely on leverage – has been particularly affected by rising interest rates and weak investor demand. However, the Watling House deal – and the £209 million Lion Plaza deal that completed two weeks ago – suggest that some momentum is building and offer hope that the second half of the year will be busier than the first."