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Inside Amundi’s £412.4m UK property sell-off

By James Buckley - Monday, June 11, 2018 15:51

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Full details have emerged of Amundi’s £412.4m, eight-property UK sell-off as it was formally launched to market this week. CoStar News takes a closer look at the full sales particulars.

The ‘Amundi Collection’ is a portfolio of eight UK properties, six of which are in London, with the remaining two in Glasgow and Cardiff. Cushman & Wakefield has been instructed to handle the sale, which was first reported by CoStar News in May.

The properties, which were principally assembled via Amundi’s €1bn acquisition of Union Investments’ Aqua portfolio of European properties in 2015, present investors with multiple investment opportunities, including core, asset management or refurbishment opportunities in London locations or stable, long income transactions in Glasgow and Cardiff. Whilst the assets are available to acquire on an individual basis, Amundi will also consider the sale of the whole, or part of the portfolio.

The properties include:

Westferry House, 11 Westferry Circus, Canary Wharf, E14:

Refurbished in 2012, with the fourth and fifth foors then refurbished in 2017, the corner site covers 0.42 acres and comprises 145,465 sq ft of office and retail space arranged over basement levels, ground and nine upper floors. The flexible floor plates of between 2,977 sq ft and 16,980 sq ft are let to the likes of the Secretary of State and Clearstream Banking.

Cushman is quoting £86.2m for 11 Westferry Circus for the virtual freehold interest with 999 years unexpired, reflecting a net initial yield of 5.48% and a capital value of £593 per sq ft.

The total gross passing rent of £4.80m per annum equates to £33.06 per sq ft overall. The WAULT is 7.2 years to lease expiries and 6.3 years to breaks.

1 king’s arms yard, EC2

A core Rolfe Judd-designed City of London office investment close the Bank of England.

The 56,071 sq ft office building completed in 2009 and is let to eight tenants at a current gross passing rent of £2.76m per annum reflecting a below market rent of £49.28 per sq ft overall.

The WAULT is around 3.1 years to expiries and the asset is held long leasehold for a term expiring in 2141 with a current head rent of £5,000 per annum.

Cushman is quoting £58.3m for Amundi’s long leasehold interest in 1 King’s Arms Yard, reflecting a net initial yield of 4.65% and a capital value of £1,040 per sq ft.

2 Copthall Avenue, EC2

The 30,833 sq ft core City office building is multi-let to seven tenants, from sectors including professional, fintech, banking, legal, healthcare and restaurant uses.

A topped up gross passing rent of £1.48m per annum is offered, reflecting an average office rent of £53.06 per sq ft. The current net rent is £1.37m per annum.

Circa 88% of the current gross income is from the offices, with the balance of 12% received from the retail / medical uses (A3/D1).

The WAULT is 4.3 years until lease expiries and 3.4 years until breaks.

The building is held on a long lease expiring on 25 June 2128. The gearing is 10% of rents received.

The asking price is £25m for Amundi’s long leasehold interest, reflecting a 5.41% yield and a capital value of £811 per sq ft.

Defoe Court, 44 Featherstone Street, EC1

A freehold asset in London’s ‘tech belt’, with refurbishment potential, which Amundi is selling for £32.5m, reflecting a 4.56% initial yield and a capital value of £753 per sq ft.

The multi-let office building comprises 43,146 sq ft, arranged over lower ground, ground and five upper floors, let to five tenants (along with a rental guarantee on two floors), producing a total rent of £1.51 per annum, reflecting a passing rent of £34.96 per sq ft overall.

Vacant possession will be available on c.70% of the NIA in 2018 and a feasibility study has been undertaken by Thirdway Architects for a full refurbishment of the property.

8 Fenchurch Place, EC3

Amundi is seeking £76.6m for the long leasehold interest in this asset, reflecting a yield of 5.5% and a capital value of £797 per sq ft.

8 Fenchurch Place was comprehensively refurbished in 2012, providing 98,647 sq ft of office space arranged over lower ground, ground, mezzanines and five upper floors.

The building is fully multi-let on effective full repairing and insuring terms at a current passing rent of £4.39m per annum, equating to £44.60 per sq ft overall, compared to prime City rents which are currently in excess of £65.00 per sq ft.

It offer reversionary income with five upcoming rent reviews in 2019 and 2020 and a WAULT of just under nine years to lease expiries and seven years to the tenant break options.

The property is held on a long leasehold interest from Network Rail Infrastructure Limited for a remaining term of circa 169 years at a peppercorn rent.

46-48 Grosvenor Gardens, SW1

A period, grade-II listed property overlooking Grosvenor Gardens in Belgravia, Amundi is seeking £17.6m for the long leasehold interest from Grosvenor Estate Belgravia. The price reflects a net initial yield of 5% and a cap val of £1,040 per sq ft.

The building was substantially refurbished in 2008, providing 16,931 sq ft of office space over lower ground, ground and five upper floors.

Floor plates range between 1,252 sq ft and 3,999 sq ft, producing a total passing rent of £996,367 per annum (inclusive of rental guarantee), which equates to £60.39 per sq ft overall. This compares with current prime headline rents in Victoria which stand at circa £77.50 per sq ft.

The building is multi-let with a WAULT of 2.1 years to the lease expiries.

The long leasehold interest from Grosvenor Estate Belgravia has circa 113 years unexpired at a headrent of 10% of rents received.

Ty Admiral, David Street, Cardiff

A long term, index linked office investment, let to Admiral Group Plc. Cushman is quoting £80.9m for the entire share capital in the Immo UK Admiral Cardiff S.à.r.l that owns the property, reflecting a net initial yield of 4.50% and a capital value of £391 per sq ft.

Located in Wales’ capital City and administrative centre, the building adjoins the St David’s Shopping Centre and the 280,000 sq ft John Lewis Department Store.

The grade A office completed in 2014 comprising 206,833 sq ft of principally office space together with three retail units and 120 basement car parking spaces.

There is a 25-year lease in place from 15 September 2014, expiring on 14 September 2039, equating to circa 21.5 years unexpired.

There a five-yearly upward only rent reviews, index linked to the Retail Price Index with a collar and cap at 1.5% and 3.0% per annum compounded annually.

The rent will be topped up to £3.70m per annum equating to £18.08 per sq ft, which reflects a significant discount to current prime headline office rents of £25.00 per sq ft.

The development is let to EUI Limited which has a D&B rating of 5 A1, and guaranteed by Admiral Group Plc

Equinox, Cadogan Street, Glasgow

A prime freehold Glasgow asset in Glasgow’s Central Business District and International Financial Services District (IFSD), Equinox is let for over 12 years to esure.

Amundi is looking for £33.3m for this asset, a 5.49% yield and a cap val of £491 per sq ft.

The development completed in 2002 and is arranged over eight storeys, providing 67,851 sq ft of office space. It is single let on full repairing and insuring terms to esure, with over 1,000 staff based at the building. Esure pre-let The Equinox prior to the completion of the development.

The total passing rent is £1.86m per annum, subject to upwards only open market rent reviews in October 2020 and 2025. The WAULT is 12.33 years with an expiry in October 2030.

jbuckley@costar.co.uk

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