South Korea’s KB Securities has pounced on another of the capital’s largest investment opportunities, placing 125 Shaftesbury Avenue, WC2, under offer, weeks after picking up another London office block that had been languishing on the market.
Almacantar appointed Cushman & Wakefield and CBRE back in May to seek offers of £286.5m, reflecting a 4.25% yield, for the 190,000 sq ft building, having mooted the sale of the red-brick property since July last year.
Mike Hussey’s firm has held the property for around five years after buying it from BlackRock UK Property Fund in 2013 for under £120m.
WeWork agreed a 20-year lease for the 140,000 sq ft of office space at the property last summer.
The rent for the first two years starting in January 2018 is £65 per sq ft rising to £81 per sq ft by year nine.
The fast-expanding serviced office provider has in turn rented the entire office space to Facebook, for at least two years, while the tech giant awaits the construction of its space at Argent’s Kings Cross scheme.
The one acre site also houses online furniture retailer Made.com’s London showroom at ground level, Latin bar Salsa! and catering equipment retailers Nisbits.
The total rent per year starts at £10.7m, which was to be topped up by Almacantar to take it to £12.39m a year until 2022.
It is the second building Almacantar has sold from its portfolio this year after agreeing to sell the grade II-listed Midtown office block CAA House, WC2, to Seaforth Land, backed by QuadReal for £165m.
The deal will leave Almacantar with a portfolio made up of two luxury residential schemes at Centre Point and Marble Arch Place, two soon to be completed office blocks at Southbank Place, which are let to oil giant Shell and WeWork, as well as Lyons Place, a mixed tenure housing and retail scheme on Edgware Road on which construction started last year.
Meanwhile, the company’s process to find a new backer or potential buyer for the £2bn business, is ongoing and simplifying its portfolio may make this undertaking more straightforward.
Last month KB Securities, one of 12 subsidiaries of Korea Stock Exchange-listed financial conglomerate KB Financial Group, which owns banks including KB Kookmin Bank, made its first London office purchase when it acquired One Cabot Square in Canary Wharf, E14, for £460m, reflecting a yield of 4.65%.
However, it was not the first investment in the UK for KB Securities, which teamed up with Kiwoom Securities last summer to buy Sainsbury’s distribution unit at Hams Hall in Birmingham for £100m from IM Properties and was part of a joint venture that purchase purchased a logistics centre let to defence and aerospace company BAE Systems for £56m. Both deals were fronted by Knight Frank Investment Management.
Since the start of the year South Korean investors have been flooding into the central London property market as a currency advantage and regulatory changes in South Korea have made it easier to invest abroad, as well as increased interest rates in the US, tightening yields in mainland Europe, and the availability of cheap debt.
KB follows in the footsteps of the likes of Samsung SRA, the real estate investment arm of the Korean conglomerate, which completed a £315m deal in January to buy 200 Aldersgate, EC1. And Seoul-headquartered investment firm Mirae Asset Financial Group, one of Asia’s largest independent financial services groups, made its UK debut with the £248m acquisition of Cannon Bridge House, EC4, through its investment firm Mirae Asset Daewoo.
In addition, the country’s pension giant, the National Pension Service of Korea, is leading the race to acquire Goldman Sachs’ £1.3bn new London headquarters at 40 Shoe Lane, EC1.
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