Derwent London has bought a Clerkenwell office block for £39.3m to continue a strong third quarter in London’s tech belt area.
The price, before costs, that the REIT paid for 63,700 sq ft 19 Charterhouse Street , EC1, reflects a 4.1% net initial yield.
It is let to the London College of Accountancy on a lease expiring in 2025 with a tenant’s break in 2020. The next rent review, in 2015, is capped at £1.7m pa. Until the review the vendor is topping up the passing income of £1.4m pa to this level, which equates to £26.50 per sq ft.
The purchase follows strong lettings activity in the third quarter. Derwent said lettings in the second half to date totalled 121,200 sq ft at an annual rent of £5.6m – 11.0% above the June 2013 estimated rental value.
The European Public Real Estate Association vacancy rate at Derwent was down in the third quarter to 1.2% from 2.4% in June 2013.
In Clerkenwell, the 87,000 sq ft Buckley Building was fully let within six months of completion to tenants including Deloitte Digital.
Also in the second half of 2013, the company completed £800m of unsecured refinancing.
As at 30 September, the group had £1.25bn of facilities, of which £389m were undrawn, plus £20m of cash.
John Burns, chief executive of Derwent, said: “We are confident that our portfolio’s estimated rental value growth will be at the top end of the 4-6% range that we predicted for the year. New lettings are achieving significantly above this level. Our successful refinancing means that we are now even better placed to fund our development pipeline and invest in additional properties.”
Derwent has 330,000 sq ft of projects to start in the next six months.
joanna.bourke@estatesgazette.com
