Green Property Ventures has put 7-8 St James’s Square, SW1 – the building that holds the record for the highest office rent paid in the UK – up for sale.
It received unsolicited interest from investors at the start of the summer, but Stephen Vernon and Pat Gunne’s private firm appointed CBRE to start a formal marketing process this week.
A sale is expected to fetch between £200m (a 4% yield), and £228.6m (a 3.5% yield). Once divested it will bring to an end Green’s ownership of a portfolio once owned by fraudster Achilleas Kallakis.
The average rent in the Eric Parry-designed, 62,195 sq ft property is £125 per sq ft. The total income is £8m pa, including 18 months’ rent guarantee on the second and third floors, at £150 per sq ft and £120 per sq ft respectively.
It is let to five tenants, including the Helly Nahmad Gallery, which agreed a record UK office rent when it took 2,959 sq ft at £185 per sq ft last April.
Fergus Keane, international partner, London capital markets, at Cushman & Wakefield, said: “The appeal of London real estate has been accentuated in recent months given the returns offered compared to other asset classes and, importantly, due to the foreign exchange advantage for non-sterling-dominated investors, which provides enhanced firepower to those equity investors when measured against the long-term average spread.”
Investors from countries such as Bahrain and Japan are in a particularly strong position to take advantage of weak sterling (see graph).
Dollar-denominated investors are currently enjoying a 26% currency premium on sterling assets compared with the five-year average, and 32% compared with the 10-year average.
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