Deka splurges €500m on London trophy asset

German fund manager Deka Immobilien is forking out €500 mln for the acquisition of the St Botolph building in London on behalf of its Deka-ImmobilienEuropa open-ended real estate fund.

The 13-storey landmark office building which was completed in 2010 offers an overall rentable area of some 558,000 sq ft (52,000 m2) and is centrally located in the City of London’s insurance district.

Designed by architects firm Grimshaw, the building is fully let to anchor tenants across the insurance and legal services sector including insurer Jardine Lloyd Thompson which signed up in 2012 for 287,000 sq ft (26,700 m2) on a 25-year lease. Other tenants are Lockton and Clyde & Co while the retail space on the ground floor is let to EAT Limited. The asset boasts a BREEAM 'Very Good' rating.

'This acquisition continues Deka-ImmobilienEuropa’s strategy to increase its portfolio allocation in London’s particularly large and liquid commercial real estate market and to benefit from its sustainable growth potential,' the company said in a statement.

The acquisition is part of the German fund manager's strategy to raise its allocation to the UK property market which is currently under-represented in its open-ended investment funds. ‘We sold a number of London properties back in 2006 and we are currently looking to rebalance our allocation to the capital city,’ the company’s chairman of the supervisory board Matthias Danne told PropertyEU at the Expo Real trade fair in Munich. ‘Pricing is challenging because there is a lot of capital targeting the market but we would definitely like to do more.’

The St Botolph scheme was sold by Jupiter, a consortium comprising Delancey, Ares Capital Corporation, Franklin Templeton Real Asset Advisors and Partners Group. The partners are believed to have made a profit of nearly €200 mln on the sale of the asset, which was taken over as part of the acquisition of London developer Minerva in 2011.

At the time of acquisition, the asset was half let and was last valued at £277 mln as part of a valuation carried out by CBRE.

Its sale at €500 mln means the consortium has already been able to take out the equity used for the £1 bn takeover of Minerva, which involved roughly £800 mln of debt, and £200 mln of cash. St Botolph had around £290 mln of debt in 2011, provided by a consortium led by lender HSH Nordbank.

CBRE and Knight Frank advised the consortium on St Botolph, while Deka was represented by Savills.