The Russian-born billionaire owner of Warner Music Group is buying the firm’s Kensington headquarters for around £60m.
In a move that will safeguard his business from soaring West End rents, Len Blavatnik has entered advanced negotiations to buy the 70,000 sq ft 27 Wright’s Lane, W8, from IBRC Assurance Company on behalf of a private Irish family.
It marks the first large Russian investment in the West End since 2012, when investors bought buildings including 6 Duke Street, W1, and 7 Howick Place, SW1, for £39.3m and £54m respectively.
The property is let to Warner Music Group until December 2020. By purchasing it the company can avoid a rent review in December next year, when a large increase on the current £38 per sq ft was anticipated.
According to Knight Frank, prime Kensington rents are closer to £50 per sq ft and expected to rise in 2014.
JLL bought the block to market in April seeking offers of £53.4m – a 4.75% yield.
Over the past 18 months a number of occupiers have bought their own buildings. Prada paid more than £55m for 16 Old Bond Street, W1, while Google bought a 2.4-acre site at King’s Cross Central, N1, for a 1m sq ft HQ.
Justin James, head of West End investment at GVA, said: “It is rare for companies to get the opportunity to buy the building they lease, so when there is the chance it makes sense for tenants to buy and protect themselves from rising rents.”
Blavatnik, who lives in London, bought Warner Music Group in 2011 in a $3.3bn (£2bn) all-cash buyout of the music company.
He ranked number four in the 2014 Sunday Times Rich List with a £10bn fortune.
All parties declined to comment.
joanna.bourke@estatesgazette.com
