Capital & Counties has exchanged contracts to buy Land Securities’ 50% stake in the Empress State building in Earls Court, SW6, for £117m.
CapCo already owns the other 50% stake in the 451,000 sq ft, 31-storey office building located adjacent to the Earls Court & West Kensington Opportunity Area.
It is fully let to the mayor of London’s office for policing and crime until June 2019, with annual rental uplifts indexed to RPI with a floor of 2% and cap of 5.25%.
The current rent passing is £14.9m. The purchase price represents an initial yield of 6.2% and an equivalent yield of 6%.
CapCo said that in the medium term, opportunities to extend or review the existing lease will be considered or alternatively the property may be suitable for a residential conversion in line with the plans for the Earls Court Masterplan.
The price of £117m will comprise a cash payment and the assumption of Land Securities’ share of the existing £131m debt facility, which will remain in place until maturity in August 2013. A new five-year debt facility is currently under negotiation.
CapCo investment director Gary Yardley said: “The Empress State building provides an attractive income stream until 2019 while offering a number of options to create further value over the medium term as the area benefits from the implementation of the Earls Court Masterplan.”
LandSec head of London property Scott Parsons said: “The sale of the Empress State building fits our strategy of recycling capital through disposals where we do not see an opportunity for full control of the asset management or development of the site.”
nick.whitten@estatesgazette.com
