Derwent in major West End purchase
Derwent London, which specialises in central London property investment and regeneration, has agreed to buy Central Cross, 18-30 Tottenham Court Road and 1-2 Stephen Street, London W1 for £146m before costs.
The key West End office, retail and leisure property includes 216,000 sq ft of offices, 24,000 sq ft of ground floor retail space fronting onto Tottenham Court Road, and an 11,000 sq ft cinema.
Derwent says annual rental income is £8.1m from 21 leases to 10 tenants with an average rent of £34 per sq ft and an average lease length of six years. The net initial yield is 5.5%. The group says 33% of the rental income is secured beyond 2020 while 38% is subject to lease expiries or breaks before December 2011. “Both the property’s office and retail elements offer significant opportunities for future refurbishment and improvement,” it said in a statement to the London Stock Exchange this morning.
The three principal tenants, who account for nearly 90% of the rental income, are media companies FremantleMedia Group, Ascent Media, and S Technologies, the owner of Skype. The deal involves the acquisition of the units in Merbrook Central Cross Property Unit Trust, a Jersey Property Unit Trust that holds the property. The acquisition will be financed from Derwent London’s existing bank facilities.
Derwent chief excecutive John Burns said the purchase “provides strong income at economic rental levels, together with opportunities for active management, future refurbishment and improvement of the office space which Derwent specialises in.”
“We will also be looking to enhance the retail units fronting Tottenham Court Road, which will benefit substantially from nearby infrastructure improvements including Crossrail. This transaction increases our holdings in the north of Oxford Street and Fitzrovia areas of W1 where we will now own 1.5m sq ft,” he added.
