Madison International Realty has appointed agents to sell a rare Square Mile freehold with potential for a 950,000 sq ft tower redevelopment.
CBRE has been instructed to sell the Houndsditch Estate and 133 Houndsditch, EC3, for around £240m – a net initial yield of 5.25%.
The five-building portfolio comprises around 320,000 sq ft with low passing rents of around £40 per sq ft overall.
Madison, a New York-based secondaries investor, acquired a 50% interest in the estate from TIAA Henderson Real Estate in December 2014, but has since quietly increased its interest to 100%.
The 200,830 sq ft 133 Houndsditch is let to five tenants including derivatives dealer CMC Markets. Occupier expiries range between 2021 and 2035.
The Houndsditch Estate comprises 120,276 sq ft and is let to more than 20 tenants, with expiries between 2017 and 2027, with a main block date of 2023. Occupiers include marketing consultants Collinson Group and insurance broker Bluefin. Total topped up passing rents equate to £4.5m, reflecting around £38 per sq ft.
The estate is within the City’s tower cluster, an area designated by the City of London Corporation as appropriate for tall buildings. It has been pitched as having the potential for a medium and longer term phased redevelopment potential of up to 950,000 sq ft.
Madison is understood to be looking at opportunities to invest further in the London office market. The investor raised $1.4bn (£1.1bn) in equity in July 2016 to buy property in the US and Europe, with a particular ambition to take advantage of uncertainty in the UK market following the EU referendum.
In December, Madison acquired a 50% stake in Oxford Properties’ Paternoster Square properties, EC4, for circa £200m. Earlier this year it made a bid on British Land’s 50% stake in the Leadenhall Building, EC3.
However, its appetite waned after CC Land made a bid for the whole skyscraper as Madison does not tend to acquire full interests in buildings.
All parties declined to comment.
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