The UK’s top property companies and funds are heating up the investment market in London’s Docklands with buildings worth just under £160m poised to change hands.
Equitable Life has paid Capital & Provident £76m for 6-7 and 8-9 Harbour Exchange, E14, which provides 24,700 sq m (266,000 sq ft) reflecting an initial yield of around 6% off an annual rent roll of £4.6m. And CIT is tipped to have bought the 8,550 sq m (92,000 sq ft) 3 Harbour Exchange for over £25m from Property Enterprise Trust Six on a yield of around 6%.
Hammerson, Henderson, Britannia Life and Argyll are among the major players eyeing Docklands which, agents say, is showing increasing signs of maturation as an investment market.
The next bidding scramble is likely to centre on Wyndham House, South Quay,which is on the market for £57.75m. The building’s owners Wyndham Properties had refused all previous overtures to sell the building in recent months. However, the company, which is the property subsidiary of Allied Domecq, now part of Diageo, has instructed DTZ Debenham Tie Leung to sell the building.
Knight Frank acted on 3 Harbour Exchange and the agent is thought to have received 10 bids for the offices. King Sturge & Co acted for CIT and Equitable Life and Lewis & Partners advised Capital & Provident.
One of the agents acting for one of the under-bidders on 3 Harbour Exchange said: “Most of the larger UK funds, major property companies and overseas investors are looking at Docklands because of the rental growth prospects and quality of the buildings.”
Another source close to the deal said, “There aren’t many locations in London where you can get space of this quality off rents under £20 per sq ft”.
Equitable life made its first investment in Docklands last October when it bought the long leasehold of the Scandinavian Centre, 161 Marsh Wall, E14, from Seventh Property Enterprise Trust for £15.4m. The deal reflected a net initial yield of 6.6%.
Lack of supply is one of the main drivers behind rental growth in Docklands. Recently, Hammerson was quoting £296 per sq m (£27.50 per sq ft) at Harbour Exchange Tower, a new rental high for Docklands outside Canary Wharf.
EGi News 10/02/00
