Blackstone is to take on its second major West End office development after exchanging contracts to buy Tishman Speyer’s Sanctuary Buildings, SW1, for £175m – a circa 5.6% yield.
The 227,000 sq ft Victoria block is let to the government until September 2017 and the Department for Education is already moving staff out to Old Admiralty Buildings, SW1.
The private equity giant is expected to pursue a comprehensive refurbishment of the triple-fronted building, which is located at 20 Great Smith Street.
It follows Blackstone’s acquisition of the Adelphi building on the Strand, WC1, in 2012, which is currently undergoing a major refurbishment.
Sanctuary Buildings was originally developed by Land Securities behind a period façade in 1991.
Tishman bought the property – which commands a £10.3m rent roll – for its European core fund in 2007 for around £175m.
The sale is a welcome result for the US investor after an earlier deal to sell the building to Henley Investments collapsed this summer.
It is expected to recycle the proceeds of the sale into prime London office buildings close to Crossrail stations.
The fund has already bought 33 Holborn, EC1 and The Point, W2, this year.
CBRE and GM Real Estate advised Tishman Speyer.
