Landsec has sold the One New Street Square office building in London to Hong Kong-based property group Chinachem for £349.5m (€397m).

The listed UK real estate company said the 276,502sqft office, leased to accounting and consulting firm Deloitte, was sold for less than the September 2022 valuation of £362.8m and ”crystallises a total return on capital averaging 10% per annum since Landsec’s acquisition of the site in June 2005 and subsequent redevelopment in 2016”.

Landsec said the disposal is part of the firm’s strategy to recycle capital out of mature London offices. Following a strategic review in late 2020, the company announced plans to sell £2.5bn of mature London offices over the medium term.

”With the inclusion of 1 New Street Square, the company has now sold £2.1bn of offices, representing an average yield of 4.4%,” it said.

The disposal proceeds will initially be used to repay debt and, on a pro-forma basis, would reduce Landsec’s lona-tovalue from 31.1% to 28.9% based on September 2022 valuations. 

Marcus Geddes, managing director, Central London at Landsec said the disposal represents a clear demonstration of the firm’s strategy in action and its strong customer relationships.

”Through this sale we have been able to unlock capital at a rate that has provided strong returns over our 18 years of ownership. Crystallising these returns enables us to turn towards future opportunities and future growth through balance sheet strength and flexibility.”

Donald Choi, executive director and CEO of Chinachem Group, said: “We’re delighted to have acquired One New Street Square successfully as it is located in the strategic Central London area with best-in-class building specifications and attractive returns. This is an important step forward for the Group and we intend to hold this property for long-term investment.

 “While Hong Kong will remain our home and core market, we intend to incrementally increase the group’s exposure in gateway cities of major developed markets, so as to fulfil our business diversification objectives and build a resilient, long-term income stream.”

To read the latest edition of the latest IPE Real Assets magazine click here.

Topics