GIC and British Land are considering a circa £1.1bn sale of UBS’s UK headquarters at 5 Broadgate, EC2.
The duo have yet to take a firm decision to dispose of the 710,000 sq ft City trophy but have begun taking valuation advice from JLL and CBRE. It is understood that UBS is also likely to be involved in an advisory capacity in any prospective sales process and the opportunity would be offered to only a select group of potential buyers.
Yields for trophy office sales in the City this year – the Leadenhall Building, EC3, for £1.15bn; and 20 Fenchurch Street, EC3, for £1.3bn – have been close to 3.4% and it is expected that a sale of the UBS building would be priced similarly.
A wall of money, in particular from Hong Kong, is looking to buy prestigious buildings in the capital and as a result record pricing has prompted GIC and British Land to consider their options, with Safra Group also contemplating a £1bn sale of the Gherkin at 30 St Mary Axe, EC3.
Both British Land and GIC are long-term holders at Broadgate more broadly and have been undertaking extensive redevelopment and repositioning to give it a more mixed-use feel and diversify its once finance-oriented tenant base.
A sale would allow the partners to release extra funds for revamping the estate. The pair have consent for a 550,000 sq ft, 32-storey tower at 2-3 Finsbury Avenue Square, they are undertaking the 530,000 sq ft major refurbishment of 100 Liverpool Street, and a new retail development has also been mooted.
A sale would be British Land second disposal of a major holding this year following the sale of its 50% stake in the Leadenhall Building. It would give the company the opportunity to further invest into its development pipeline, which includes its 5.5m sq ft regeneration project in Canada Water, SE16.
The sale would also deliver a strong return on some of GIC’s £1.7bn investment when it bought 50% of the estate from Blackstone in 2013. Its 17.5% stake in the Bluewater shopping centre in Kent is also up for sale for £400m.
UBS agreed a prelet in 2010 at a rent of £54.50 per sq ft for an average 18.2 years across its occupation. The Swiss bank moved into the Make-designed building last year.
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