Landsec is selling a pre-let 568,500sqft London office development to a TCorp-backed Lendlease vehicle for £809m (€955.6m).
Landsec said it has agreed to sell the 21 Moorfields EC2 asset which has been pre-let to Deutsche Bank on a 25-year lease at an annualised net rent of £38m.
Stripping out outstanding development-related items, Landsec is expected to receive net cash of £733m, according to the London-listed real estate investment trust.
As part of the deal, Landsec will complete the development which is expected to be ready in the first quarter of next year.
Neil Martin, Europe CEO at Lendlease said: “The scale of this joint investment in the City of London reflects the global appetite for premium and sustainable office assets in the world’s key gateway cities. In addition to our close partnerships with international capital, Lendlease also brings our global expertise in funds and asset management to this deal at 21 Moorfields.
“This significant acquisition adds size and weight to our European investments platform and contributes to our global funds under management target of A$70bn (€48.2bn) by FY26. In addition to converting our A$117bn development pipeline, our team will continue to scope on-market opportunities across Europe as we seek to add further scale to our investments platform in the region.”
Lendlease said it will manage the investment vehicle, on behalf of its investment partners including Australia’s TCorp and its own minority interest.
Stewart Brentnall, CIO at TCorp, the NSW state government’s investment and financial management arm, said: “TCorp has been actively pursuing direct property investment opportunities across Europe and is pleased to expand its relationship with Lendlease by partnering in the landmark 21 Moorfields opportunity.
”This strategic initiative contributes return, diversity and sustainability to our global real estate exposures. This is TCorp’s first direct investment into the London Office market and our second UK transaction after acquiring a large scale, high-quality logistics asset earlier this year.”
Rothesay is providing financing for the acquisition with a 10-year senior term loan.
Harish Haridas, head of commercial real estate debt at Rothesay, said: “We are delighted to support the acquisition of this unique new addition to the City of London’s premium office stock. These types of high quality secured commercial real estate loans are attractive to us and play an important part in our investment portfolio, providing long-term security for the pensions we protect.”
Marcus Geddes, managing director, 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.”
According to Landsec, the sale is in line with the firm’s strategy to recycle capital out of mature London offices and reduces the company’s loan to value from 34% to 30%.
Following its strategic review in late last year, Landsec has now sold £1.8bn of London offices at an average yield of 4.35%, the company said.
To read the latest edition of the latest IPE Real Assets magazine click here.
