Norges Bank Real Estate Investment Management and the Crown Estate are buying two assets from Standard Life’s Galaxy portfolio for £227m.
Norges has placed under offer the long leasehold of 10 Piccadilly, W1, for around £160m – a circa 3.9% yield.
The 57,000 sq ft asset, known as Swan Gardens, is the main office of Noel Hayden’s online gaming company Gamesys and was also marketed individually for offers in excess of £140m.
The Crown Estate has placed under offer the long leasehold of the 51,000 sq ft office at 11-12 Charles II Street, SW1, for £67m – a 6.5% yield. The building is home to Infrared Capital Partners.
Standard Life instructed Strutt & Parker to sell a 50% stake in the five-asset Galaxy portfolio in October but earlier this month the portfolio sale was aborted after “a number of the external factors affecting a co-investment of this type having changed recently”.
The Crown Estate owns the freehold for both of the properties and unifying the long leaseholds and freeholds is likely to add extra value and minimise ownership complications.
The Crown Estate and Norges are close partners, notably on Regent Street, in which Norges bought a 25% stake in 2010 for £450m, and in the Pollen Estate. The duo have an agreement as part of their Regent Street joint venture whereby they must look at assets together first when they are in close proximity, as with 10 Piccadilly and 11-12 Charles II Street, before being allowed to invest individually, but in this case they have decided to go it alone.
11-12 Charles II Street is part of a block owned by the Crown which is to form a future phase of St James’s Market, its joint venture with Oxford Properties.
In an interview with Estates Gazette in April, Karsten Kallevig, chief executive of Norges Bank Real Estate Management, was adamant the Brexit vote, despite bringing increased uncertainty, had not deterred him from investing into the UK.
Norges’ July purchase of 355-361 Oxford Street, W1, for £124m from Aberdeen Asset Management was made after the referendum and from a seller forced to do so as a result of the vote.
It followed this up last month by buying the freehold of Great Portland Estates’ 73-89 Oxford Street, W1, and 1 Dean Street, W1, for £276.5m – a 3.2% yield.
Kallevig said: “Article 50 hasn’t been triggered yet. We don’t know when it will be, when the exit will happen, on what terms it will happen, what has been priced in, what investors will think, and what London or the UK will do in response to whatever the terms of Brexit are.
“So, forecasting the future I think is very difficult, but in itself, based on where we are now, it is not changing our view of London as one of the most important cities in Europe.”
