Axa Real Estate is in talks to take control of an island site behind the Heron Tower, EC2, as it cashes in on Rockspring’s £240m sell-off of London assets.
The French fund manager is under offer to buy 63 St Mary Axe, EC3, for £70m – a 5.25% yield.
The deal follows Axa’s acquisition of the adjoining Camomile Court from Cordea Savills for £50m in a deal that completed in January. It means that Axa now controls the City block bounded by St Mary Axe, Houndsditch, Camomile Street and Outwich Street.
Axa’s strategy was to ensure that the acquisition provided value in its own right; however, it also offers the potential for a substantial redevelopment in the medium to long term, given the site’s location in the City tower cluster.
Both Camomile Court and 63 St Mary Axe are multilet on leases of up to 10 years. Most of the leases have breaks at year five, however.
The building is one of the last three London assets owned and managed by Rockspring, all of which are currently under offer. Fox Court, WC1, is under offer to US investor Karlin Real Estate for £70m and Rockspring is also in talks to sell Monument Place, EC3, for around £100m following a flurry of lettings.
Although the three buildings are held in separate funds with separate investors and strategies, the combined £240m sell-off highlights the widely held view that it is a good time to realise profits in the capital.
“There is a question about how much further yield compression can go, so many investors are now considering their exits,” a source said.
Fox Court is in the Hanover Property Unit Trust, which is expected to recycle the capital, while 63 St Mary Axe is managed on behalf of a private client.
Monument Place is owned by Rockspring’s UK Value 1 Fund, which bought it in 2010.
Follow-on fund UK Value 2 held a final close at the start of this month, having raised a total of £342m. It has already invested in seven properties, all of which are outside the capital.
JLL and Knight Frank advised Rockspring on 63 St Mary Axe; Strutt & Parker is acting for Axa.
