An Indian hotel developer has agreed a deal to buy the 72,359 sq ft office and retail building at 5 Strand, WC2, from BlackRock UK Property Fund, for more than £90m – a circa 12.5% uplift on the original asking price.
The private developer, which is understood to be making its UK debut, fought off competition from 21 other bidders to acquire the freehold asset on Trafalgar Square. The deal has exchanged.
Cushman & Wakefield and Tudor Toone were instructed to sell the building in January for £80m – a net initial yield of 4.62%.
The building, which is let to Westminster City Council and Boots, was marketed with indicative plans designed by Adjaye Associates for a 200-room hotel scheme [main picture]. BlackRock secured planning consent in July 2017 for a new 152,400 sq ft office, residential and retail development. The consented plans include 61,670 sq ft of office accommodation between the first and sixth floors, 5,376 sq ft of retail space on the ground floor and 38,941 sq ft of luxury residential accommodation.
The deal follows a trend for office buildings in the West End to be targeted for conversion into a hotel. Recent targets for change of use have included the former US Embassy, which is being converted into a Rosewood hotel by Qatari Diar and Admiralty Arch which is being turned into a Waldorf Astoria.
Sir Michael Kadoorie is creating London’s first Peninsula hotel on the former office building at 1-5 Grosvenor by Hyde Park Roundabout, while Sir Richard Sutton won approval last month to turn Film House on Wardour Street into a hotel.
Data from Savills shows that overseas investment into hotels in London totalled £1.06bn last year, an increase of 17.7% on 2016.
Institutional capital investment into hotels also grew 6.8% to £370.7m in 2017, the highest level of investment from this buyer type for over 10 years, according to Savills.
Blackrock acquired the building in 2011 from a private investor for £53.5m.
Savills advised the purchaser.
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