Aviva has been forced to sell some of the largest central London assets from its £1.7bn retail fund after being hit by a stream of redemptions.
The Aviva Investors Property Trust was expected to complete the sale of the 92,500 sq ft Alder Castle at 10 Noble Street, EC2, to rival retail fund PRUPIM’s M&G Property Portfolio for around £60m this week.
The price is £2m less than Aviva paid for the block just over a year ago, and is more than 8.5% below the £65.6m it instructed Jones Lang LaSalle to sell the building for this May.
The sale was prompted by investors looking to exit the fund amid the eurozone turmoil of the past 18 months.
According to the latest IPD/AREF quarterly report, more than 95m units were redeemed in the 12 months to December 2011, with a further 53.9m units redeemed in the three months to March 2012.
Based on a price of 105p, this represents more than £156m pulled out of the fund, or more than 9% of its total value.
The fund changed its policy on redemptions in June last year “following a return to negative net cashflows”.
The sale of Alder Castle follows that of Bafta’s HQ at 195 Piccadilly, W1, for £87m, to the Crown Estate, which completed last month.
The 81,000 sq ft Princes House, together with the shops and offices at 36-40 Jermyn Street and 192-196 Piccadilly, was the third-largest asset held by the fund as of 30 June 2012, and its largest in central London.
An Aviva Investors spokesman said: “Proceeds from recent asset sales continue to support the trust’s liquidity, as well as providing capital for adding value to other properties.
“We believe that the medium-term outlook for UK commercial property remains attractive, despite a recent slowdown reflecting the exceptionally challenging economic background.”
Cushman & Wakefield represented the Crown; Aviva was advised by JLL on Alder Castle; and Knight Frank on Bafta.
jack.sidders@estatesgazette.com
