Barings has acquired a London office building from a German retail real estate fund managed by DWS, for £130.5m (€153m), on behalf of a core investment strategy.
The real estate manager said it has bought Capital House on the north side of King William Street, which comprises 126,000sqft of office, retail and ancillary space over basement, lower ground, ground and eight upper floors.
The building, constructed in 2003, is currently 55% let to six tenants.
Barings said it will undertake a “comprehensive programme of active asset management to reposition the building into a best-in-class office in the core of the City of London, with strong sustainability credentials”.
Darren Hutchinson, managing director, real estate country head – UK at Barings, said: “This transaction allowed us to acquire a prime Grade A office building in the heart of the City of London that also offers a rare opportunity to create unrivalled office accommodation through the repositioning of the building and refurbishment of vacant floors to provide flexible internal and external space to meet current occupier requirements.
“This acquisition is also a clear endorsement of the enduring appeal of London as a global business hub as people begin to return to the office.”
Gunther Deutsch, managing director, head of real estate transactions – Europe at Barings, said this transaction is the manager’s fourth office transaction in Europe this year which “reflects our still growing appetite for attractive office acquisitions across Europe”, be it refurbishments or new speculative developments.
“Covid-19 made us look much more closely into central business district locations as we believe that an attractive location combined with an attractive building quality will continue to be in strong demand by occupiers.”
Compared to other continental markets Barings sees good value in the UK especially in the office, logistics and BTR/student housing sectors, Deutsch said.
“In our key European geographies of the Nordics, the Netherlands, the UK, Germany, Italy, France and Spain, we are still keen to acquire real estate in categories ranging from core to value add including speculative developments and forward transactions,” Deutsch said.
Ronen Ribak, the head of real estate transactions, Europe at DWS said: “Over the term of our ownership Capital House has delivered attractive risk-adjusted returns in terms of income growth and capital appreciation for our investors. We have taken the market opportunity to sell this A Grade asset and will use the opportunity to further diversify the fund.
“DWS will continue to seek high-quality assets in key locations and priority sectors such as the wider living sector and offices with ESG related value creation opportunities across the UK and Europe.”
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