Great Portland Estates sells City office at 3.85% yield in fillip for the market

Great Portland Estates (GPE) has exchanged contracts to sell 50 Finsbury Square, EC2, for £190m – in a fillip for the real estate market. The price represents a net initial yield of 3.85% – which reflects the continued strength of investor demand for prime office buildings despite economic woes.

The 121,800 sq ft office, which is currently undergoing a comprehensive refurbishment and is pre-let to telecommunications company Inmarsat Global Limited, is being acquired by German family office Wirtgen Invest Holding GmbH. The sales price is “broadly in line” with the March 2022 book value after adjusting for estimated capital expenditure to complete.

GPE will retain responsibility for delivering the development with completion of the sale expected in the first quarter of 2023 following practical completion and commencement of the leases of the office and retail space.

Net proceeds will be used to pay down the group’s revolving credit facility and will reduce the company’s loan to value (LTV) from 22.2% to 16.8% based on a pro-forma June 2022 balance sheet (based on March 2022 property values). Once fully let, the rent on completion will be £9.0m per annum.

The eight-storey building includes four retail units fronting Finsbury Pavement (two of which have been pre-let and the remaining two under offer) and an extensive roof terrace on the 8th floor overlooking Finsbury Square. When complete, the building will be BREEAM ‘Excellent’ and GPE’s first Net Zero Carbon development.

Toby Courtauld, chief executive of GPE, said: “In 50 Finsbury Square, we have created an exceptional home for Inmarsat, not least given the sustainability credentials our refurbishment will deliver. The sale is consistent with our strategy of recycling capital out of mature assets to be utilised in our many other development opportunities.”

GPE : Great Portland Estates sells City office at 3.85% yield in fillip for the market

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