British Land has put the London flagship of department store Debenhams up for sale.
The REIT is selling the freehold of the 366,000 sq ft store at 334-348 Oxford Street, W1, for around £150m – a circa 5% yield. A rent review with a fixed 2.5% uplift is due in March next year. It will take the income to £8.48m pa – a 5.7% yield.
The 1.33-acre island site is let to Debenhams on a full repairing and insuring lease for 35 years from March 2004.
Andrew Jones, head of retail at BL, said: “We have no emotional attachment to our assets and, despite market conditions, we will continue to make disposals. We will look to redeploy the proceeds into areas where they best serve our shareholders.”
BL received several approaches for the store before the credit crunch, but is understood to have been unwilling to sell the property as it would have been faced with a large capital gains tax bill. However, a source said that now values have dropped the CGT will be less severe.
The REIT acquired the Oxford Street building in 2005 as part of a £495m sale-and-leaseback of 23 Debenhams stores.
BL has been steadily disposing of retail properties as part of its strategy to focus its portfolio on properties where it can implement asset management measures. During the past few months, it has sold several of the Debenhams stores that it acquired in the sale-and-leaseback, including a 113,000 sq ft building in Staines, west London, to Canada Life for £16.1m.
The group is understood to be keen to dispose of much of its fixed-income portfolio, which includes a number of B&Q stores. It had hoped to spin off the £1.6bn portfolio into a specialist REIT.
CB Richard Ellis is advising BL.
