Land Securities has exchanged contracts to sell its Moorgate station office development 21 Moorfields, EC2, to Lendlease for £809m.
After outstanding development-related items, net cash receipt to Landsec will be £733m. 21 Moorfields is a 568,500 sq ft London office development fully pre-let to Deutsche Bank AG on a 25 year lease, with an annualised net rent of £38m. Built directly above Moorgate station, the asset is targeting sustainability ratings of BREEAM Excellent and LEED v3 Gold.
Landsec will retain the responsibility for completing the development, with practical completion expected in the first quarter of 2023. Lendlease will manage the investment vehicle, on behalf of its investment partners including Australia’s TCorp and its own minority interest.
The purchase price represents an effective 9% discount to the March 2022 value, but does crystallise an anticipated development profit of £145m, representing 25% profit on cost. The sale is in line with Landsec’s strategy to recycle capital out of mature London offices and the net proceeds of the disposal will initially be used to pay down debt, reducing the company’s loan to value from 34% to 30% based on a pro-forma March 2022 balance sheet.
Following its strategic review in late 2020, Landsec has now sold £1.8bn of London offices at an average yield of 4.35%.
The company said that the sale and lower leverage provides it with “significant flexibility to invest in future opportunities with a higher forward return”.
Marcus Geddes, managing director of Central London at Landsec, said: “21 Moorfields is a fantastic example of Landsec’s development expertise in delivering a high-quality project at one of the most complex construction sites in London. We are particularly proud to have achieved a number of engineering firsts associated with the development of such a significant building which sits directly above both Moorgate Underground Station and the new Crossrail line to Liverpool Street.
“These achievements, combined with the securing of a 25-year pre-let agreement with Deutsche Bank, has culminated in substantial grade A office space with long-term income, the value from which we can now unlock in order to recycle capital into new opportunities, in line with our growth strategy.”
LAND : Landsec sells Moorgate station office for £809m