Fidelity International has bought 99 Queen Victoria Street, EC4, from WeWork’s property arm for a new climate impact fund.
The property, which was put up for sale in February for around £68m, is understood to have sold at a price closer to £55m.
Fidelity, which did not disclose the price, plans to fully refurbish the property in line with net zero carbon targets to create a fit-for-purpose landmark office building.
The repurposed building will offer 88,000 sq ft of office space and will target BREEAM Excellent, EPC A, NABERS five-star and Wiredscore Platinum accreditations.
The group said the new design would provide simplified and clear floorplates across all levels that are fit for modern day use. Refurbishments will focus on improving energy efficiency, including the removal of gas equipment, installation of air source heat pumps and a new building management system. New tenant amenities will be provided at lower ground floors with cycle parking, EV chargers for bikes and scooters and showers.
Work on the refurbishment will begin in early 2024 with completion expected in 2025.
The acquisition is the first for Fidelity’s European Real Estate Climate Impact Fund, which has a primary objective to deliver “capital appreciation through direct property investments which aim to support the mitigation of climate change and the transition to net zero carbon”.
Fidelity said the fund aimed to achieve its objective by refurbishing and repositioning predominantly commercial real estate assets in Western Europe to deliver high-quality sustainable workspaces.
Uplifts in capital value are expected to be achieved through an increase in rental value and through investor demand for sustainable assets. Assets are expected to be held for three to five years.
Neil Cable, head of European real estate investments at Fidelity International, said: “While investors can buy new assets built to higher environmental standards, the biggest scope for achieving impact lies in the buildings that exist today, most of which are expected to still be around in 2050. Refurbishing and retrofitting these buildings can both reduce the carbon footprint of our built environment and improve the wellbeing of those who use them.
“Turning brown to green also presents a significant investment opportunity as there is currently a chronic undersupply of net zero carbon space versus occupier demand, resulting in a green premium. This structural mismatch will erode over time but we believe the next five to seven years represent a rare opportunity to deliver disproportionate returns for carefully managed development risk. 99 Queen Victoria Street is one of a series of investments in the pipeline for our new Fidelity European Real Estate Climate Impact Fund.”
Cushman & Wakefield acted for the vendor; James Andrew International advised Fidelity.
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