Great Portland Estates has sold the freehold of 73-89 Oxford Street, W1, and 1 Dean Street, W1, to Norges Bank Real Estate Management for £276.5m – a 3.2% yield.
The office and retail development is under construction and expected to completed in Q2 next year.
The scheme is prelet to New Look, Benetton and Moneysupermarket with a WAULT of 17 years. The rent on completion will be estimated £9.74m pa.
NBREM have paid £205.2m, with the balance of the purchase price payable on completion of the leases.
The price NBREM will pay allows for a deduction in lieu of interest on their initial capital outlay until practical completion at a rate of 3.2% pa and an allowance for tenant-rent free periods.
GPE will receive two further payments on completion of the leases in July 2017 of £46.2m in deferred consideration and £25.1m for reimbursement of the development costs to complete the scheme.
Toby Courtauld, chief executive, GPE, said: “Oxford Street has been an exceptional project for us and this sale continues our strategy of recycling capital out of assets where we have created significant value. Having secured an attractive planning permission, prelet the building and enhanced our interest through the purchase of the freehold earlier this year, this sale crystallises a whole life capital return of 75% and an annualised unlevered IRR of 28.4%.”
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