The American owner of Google’s Victoria base is attempting to wrest control of the neighbouring 151 Buckingham Palace Road, SW1, to create a new retail destination.
Asset manager London Global confirmed it was in advanced negotiations, on behalf of San Francisco investor Divco, to acquire the 280,877 sq ft building for £250m from Malaysian fund Lembaga Tabung Haji. The price reflects a 5% initial yield.
However, Savills, which traditionally advises Tabung Haji in London, has also been approached by competing investors looking to buy the building on an off-market basis.
The two office buildings total 483,877 sq ft, including 85,000 sq ft of shops on the ground floor. London Global plans to upgrade the existing retail offer between 123 and 125 Buckingham Palace Road, which is dominated by gift shops and a Bradford Food and Wine supermarket, to high-quality restaurant space to complement Land Securities’ nearby Nova scheme. Nova is under construction and due to complete in 2016.
London Global has already held discussions with Westminster city council and freeholder Network Rail about its proposals.
Victoria is being transformed from a government-dominated area into a premium office and retail destination, with major landowner Land Securities at the forefront of the revamp.
This has led other investors, including Kennedy Wilson Europe Real Estate, Threadneedle and German pension fund VGV, to buy in the area in the past six months.
A special-purpose vehicle called Fountain & Colonnade controls both buildings via a single lease with 226 years remaining. Tabung Haji and Divco each own 50% stakes in the SPV, which relate directly to the distinct properties.
Divco and London Global acquired 123 Buckingham Palace Road (pictured) in 2014 for £200m from Westbrook Partners. Tabung Haji bought the leasehold relating to 151 Buckingham Palace Road for £205m in 2013.
Google is the largest tenant in 123 Buckingham Palace Road. Its lease runs until 2016 and it is expected to vacate the 87,000 sq ft it occupies when it moves to its new 1m sq ft base at King’s Cross Central, NW1. Other tenants in the two Victoria buildings include PA Consulting and oil and gas firm ENI.
Although 151 Buckingham Palace Road has attracted interest from other investors, sources said the joint venture structure and redevelopment talks gave London Global and Divco a strong position.
A source said: “They have a distinct advantage when it comes to taking control of 151, where they have effectively been in a joint venture with the vendor. That would spell a remodelling and rebranding of a combined site which would be a big contribution to Victoria’s new retail landscape.”
