A Japanese private client of Sumitomo Mitsui Trust Bank has acquired London’s principal divorce court for £154m – a 3.4% yield.
Sol Zakay’s Topland Group has sold the freehold interest in First Avenue House 42-49 High Holborn, WC1, which comprises around 112,274 sq ft of office accommodation and is let in its entirety to the First Secretary of State until September 2038, with fixed rental uplifts of 2.5% pa.
The deal is expected to signal the start of increased Japanese investment into UK real estate, which has been limited since the early 1990s.
In April last year, Japan’s £1tn Government Pension Investment Fund issued its first-ever call for global alternative asset managers, including for real estate, as it prepares to start investing 5% of its portfolio into real estate and infrastructure.
Other Japanese investors are expected to follow, joining those that are already active, such as Mitsui Fudosan, Mitsubishi Real Estate and NTT.
Factors behind the recent push into global real estate by Japanese investors include low economic growth rates, a falling and aging population at home as well as negative interest rates and significant cash reserves, according to Knight Frank’s active capital report 2017. Their domestic market is relatively illiquid in major cities such as Tokyo.
First Avenue House is in active use as a court room facility with 29 separate court rooms in addition to chambers, offices and ancillary space. There are also areas for the general public with associated amenities.
First Avenue House provides a crucial role in the British judiciary system, acting as the Central Family Court for London, which predominantly hears cases relating to matrimonial issues, family matters and probate.
The property offers a number of future asset management opportunities including extensive refurbishment, extension, conversion or full redevelopment to substantially increase the building massing.
The deal is understood to represent the Japanese investor’s debut UK real estate investment.
Savills represented Topland Group; Knight Frank advised the purchaser
All parties declined to comment on the buyer.
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