The Weekly Wrap
show determination in 55 Gracechurch Street purchase
DTZ Investors has sold prime City of London office building
55 Gracechurch Street, EC3, to Hong Kong based Tenacity Group for £69million.
The office development attracted strong interest from high
net worth and institutional global investors as the EC3 building was sold for
above asking price.
The core City office is in a prime location in London’s
financial and insurance district, being close to the Bank of England and the
Lloyd’s Building. Nearby amenities include Leadenhall Market and The Royal
Exchange and it is a short walk from Monument station. There are a number of
high profile occupiers nearby including Allianz, AON, RSA Group, Markel and
Clydesdale Bank PLC. It provides office, leisure and ancillary space over 6
upper floors, ground and lower ground floors.
Significant developments have been completed nearby in recent
years. Local landmark towers include The Leadenhall Building, 20 Fenchurch
Street and W.R. Berkley’s 52 Lime Street which is due to be completed in 2019.
The building will have a direct impact from Crossrail as it is a 10 minutes’
walk from the Liverpool Street entrance to the Elizabeth Line.
The building is let to four tenants including The Royal
London Mutual Insurance Society, who occupy the building as its headquarters.
The sale shows continued confidence in EC3 Office’s and is
once again a purchase from an overseas investor as they look to capitalise on
what is seen as a worthy investment in the Square Mile. DTZ Investors
originally bought 55 Gracechurch Street for around £48 million pound in 2014,
from Ropemaker and on behalf of the BP Pension Fund.
Earlier this month, WeWork released financial results for H1
2018 and, at face value, they did not make for comfortable reading. The
company, currently believed to be valued at $35bn, recorded net losses of $723m
over the period, roughly 4 times that which was accrued over the same period
Artie Minson, WeWork’s chief financial officer, has suggested
that the significant increase in the company’s losses could be due to the lag
time between investing in refurbishing its facilities and the point at which
they become income producing. Given the acquisitive nature of the company and
its ever expanding number of centres, particularly in and around the City of
London, this is not inconceivable.
In spite of these alarming financial results, WeWork at the
same time announced that it had raised a further $1bn in investment from
Japan’s SoftBank, bringing its total cash pile and cash commitments to $4bn.
The funds are expected to be used on international expansion, investment into
existing centres and the acquisition of more properties and leaseholds.
WeWork are rumoured to be in discussions to take a further
c.30,000 sq ft building in the EC3 postal district of the City of London, with
the refurbishment of 51 Eastcheap already underway. This is yet another vote of
confidence in the City of London and its robust occupier market. However, with
total lease commitments in the UK now alleged to be in excess of £3bn (across
more than £3m sq ft) and rising, it will be no small feat to achieve and
maintain the occupancy rates required.
wealth fund agrees 320m deal to buy Amazon office
There has been another huge deal confirmed in the City of
London as Norges Bank Real Estate Management has agreed terms to buy Sixty
London office building from Amazon.
A recently developed 10-floor asset of 236,400 sq ft has been
occupied by Norwegian wealth fund which makes the second London office building
‘Norges’ has invested in.
According to CoStar, the deal is estimated to be worth around
£320m having received around seven bids for the asset. Five of the seven bids
were from Korean investors such as KB Securities and Hanwha Group.
Sixty London was set to be sold earlier this summer by
Cushman & Wakefield and another estate agency.
60 Holborn Viaduct, EC1 is currently let to online retailer
giants Amazon on a 15-year lease which is set to expire on 16th
September 2028. Amazon moved its operations to Central London before opening an
even larger headquarters in City’s Shoreditch district last year.
The largest retail unit took 431,000 sq ft of Principal Place
circa 607,000 sq ft office space in 2014 believed to be around £50 per sq ft.
Amazon now has the option to take back the rest of the space with 12 months’
notice from 2022. This means it will end up occupying the entire buildings
Founded 25 years ago, Amazon has seen to rise to become most
valuable retail brand with a 42% brand value increase between 2016 and 2017.
CBRE Group Inc reveals that a record of £3.6bn has been
invested in the City of London offices over the second quarter this year.
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