German asset manager DWS has pulled out of a deal to acquire a leasehold interest in 70 Chancery Lane, WC2, a mixed-use block in London’s Midtown submarket, from the Trustees of Viscount Folkestone.
DWS had been under offer at around £68m, which would have reflected a yield of around 5.75%. A source close to the deal on the acquiring side said the deal fell through for a number of reasons, including an issue relating to fire regulations which had delayed the deal.
This was, however, contested by another source who said the hold-up had been a delay to the transfer of a document required to prove the building’s compliance.
The acquisition of the 175-year leasehold interest would have been an important data point for the market, showing where values were for assets which offer stable long-term income. The 77,812 sq ft asset was originally marketed for £76m, which would reflect a yield of 5.2%, but instead went under offer at £68m, which reflected a yield of around 5.75%.
The building is single let to engineering firm WSP for 15 years, with no lease breaks and rent reviews every five years. The asset also includes seven retail units and nine residential flats. It brings in a total annual rental income of almost £4.7m.
Nevertheless, another similarly long-term income asset could provide some clarity instead.
J. Safra Group, controlled by the Safra family, has brought its long leasehold interest in 95 Queen Victoria Street, EC4, to market for £102.5m via Savills, with 129 years remaining on the leasehold.
The seven-storey asset is comprised of 84,770 sq ft of office and 10,596 sq ft of leisure accommodation across the building’s seven storeys.
Knight Frank are advising on the sale of 70 Chancery Lane, while CBRE are advising DWS.
Send feedback to Dominic Plaskota
Follow Estates Gazette
