Great Portland Estates (GPE) is selling its leasehold interest in Clarendon House at 17/18 New Bond Street in London’s West End for £50m to a private investor.
The sale comes six months after GPE negotiated an extension to the lease on Bond Street House, across the road from Clarendon House, which increased the valuation of the two buildings by £8m.
The specialist central London developer/ investor will make a further £6.5m profit over the book value of Clarendon House after the lease at Bond Street House was regeared in March.
The deal reflects an initial yield of around 4.5% for the purchaser.
Existing tenant LVMH Fashion Group UK, trading as Louis Vuitton, has a 12,700 sq ft store on a lease due to expire in 2016, while the 22,100 sq ft of offices above are multi-let. The property produces £2.4m pa.
GPE also announced today (2 November) that it has started work on its remodelling of the entrance and offices at Bond Street House.
Following the negotiated surrender of three principal leases, the 12,000 sq ft refurbishment is expected to be completed by the end of 2005, two years earlier than originally planned.
It will push the rental value of the offices up from £32.50 per sq ft to £55 per sq ft.
In February, existing tenant Mappin & Webb, trading as Watches of Switzerland, took a new overriding lease over three floors to create a flagship store at Bond Street House with associated offices.
It had previously occupied only the ground and basement shops on two leases expiring in June 2006, but extended its lease by 25 years.
Toby Courtauld, Chief Executive of GPE said: “Clarendon House has benefited from significant rental value growth over the past 6 months, due primarily to our letting to Mappin & Webb at Bond Street House, our holding opposite, where we set a new rental tone of £500 Zone A. We have also seen yields harden recently, due in part to the significant weight of private capital chasing trophy buildings.”
References: EGi News 02/11/04
