€2.6b of London offices seek new owners

PropertyEU has established that more than £2 bn (€2.6 bn) of London office stock is available for sale, with the overwhelming majority likely to go to overseas investors.

Probably the largest at the moment is Blackstone's 50% stake in British Land's Broadgate office scheme. But it may not be available for long.

Market rumour suggests that Norges Bank, manager of Norway's giant Government Pension Fund Global, is in talks to buy the stake for up to £600 mln.

In another big-ticket deal Samsung Asset Management is reportedly poised to exchange on 30 Gresham Street for £310 mln, or a 5% yield. The transaction would be an all-Asian affair as the vendor is Singapore's GIC.

Foreign equity, particularly from Asia, is a dominant force in the London office market. Last year 100% of the deals above £100 mln, and the same is likely to be the case this year. A lot of the big Asian institutional investors are happy at £100 mln-plus. UK funds and private investors generally operate within the £20-70 mln range.

Supply is share but the major UK REITs are offering both short-term and longer-term partial solutions. To help fund its development drive, UK REIT Land Securities is selling 1-2-3- Bank Side, a mixture of office and retail space near the Tates Modern, for £312 mln, a yield of 5.25%. The offices are let to RBS Bank on a 14-year lease.

Land Securities is selling long income in part to help fund its extensive London development programme. 'Whilst they have just announced they are going speculative on the New Ludgate scheme they are also hunting down additional large scale added value opportunities to deliver enhanced returns,' said,' James Bechkham, director capital markets at City Investment for JLL noted

Similarly, the sale of Ropemaker Place to a consortium led by AXA Real Estate for €540 mln will help fund British Land's development activities.

A range of other medium-to-large assets are on the market.

Beckham confirmed JLL is marketing 1 Fleet Place for about £109 mln and 5.25% and that the process is progressing well.

JLL is also working on selling the 19,00 m2 freehold development at 60 London for AXA Real Estate for £200 mln. Effectively pre-let to Amazon, the project is a 'stone's throw' the what will be the Farringdon Crossrail station.

UK property company Helical Bar has instructed CBRE and Savills to sell the former London headquarters of law firm Clifford Chance at 200 Aldersgate Street for over £200 mln.

German fund manager Deka Immobilien is selling its building at 14 Pier Walk, Greenwich for £110 mln or a yield of 5.25%. The property is let to transport for London on a 14-year lease.

DTZ is looking for £110 mln, or 6%, for a multi-let premises at 10 Fleet Place, while Savills is selling Finsbury Dials on behalf of the Irish Bank Resolution Corporation for just under 100 mln. The leasehold property provides 10-year income from Morgan Stanley, giving a yield of 5.5%. The gearing is set at 10%.