Commerz Real steps back into London office market

Germany's Commerz Real has returned to the UK property investment market as a buyer after an absence of more than two years with the acquisition of the Athene Place office building in London. The investment volume of EUR 124mln reflects a net initial yield of about 5.8%. Commerz Real, the real estate subsidiary of Commerzbank, said 13,700 m² office property bought from Scottish Widows is earmarked for its open-ended property fund Hausinvest Europa.

Savills acted fro Commerz Real and BH2 advised Scottish Widows.

Athene Place was developed on a land plot owned by the City of London and has a 99-year ground lease that can be extended until 2152. The ground rent, Commerz Real said, is limited to the symbolic figure of one pound sterling, known as 'pepper corn'. The property generates an annual rental income of EUR 7.2mln and is fully let to tax and corporate consulting firm Deloitte MSC through to 2027. The restaurant facilities on the ground level are also fully let. Details on the rent and initial yield were not disclosed.

Commerz Real has not been an active buyer in London in the last few years when high price levels and low yields were the norm. Explaining the company's re-entry into the market as a buyer, Commerz Real board member Hans-Joachim Kuhl said: 'The UK has once again developed into an interesting investment market for us.'

Commerz Real's most recent investment in the closed-end fund sector was the Lloyds Building in London in 2005. Hausinvest Europa's last acquisition in the market was of the Westfield shopping Centre the year before. The German company stuck exclusively to disposals during the last boom in the UK real estate sector. 'Now, though, market conditions are gradually returning to normal, and we are once again looking at attractive investment opportunities,' Kuhl said. 'We are convinced that London will remain one of the most important markets in Europe.'