Derwent London acquires 'Tech Belt' office scheme at 3% yield

Derwent London is buying an office scheme in the 'Tech Belt' of the UK capital for £75 mln (€95 mln), reflecting a net initial yield of just over 3%.

The London-listed property company has exchanged contracts to acquire the freehold of Angel Square, Islington EC1 in London’s Tech Belt from an overseas investor.

The corner property, opposite Derwent London's Angel Building, consists of three multi-let connected buildings around a central courtyard. It mainly comprises 128,700 sq ft (11,960 m2) of offices above Angel underground station. The passing rent is £2.4 mln per annum and 10% of the leasable area is vacant. Rents on the let space range from £10 to £30 per sq ft, with an average of £21.68 per sq ft. The majority of the leases expire in March 2015. The net initial yield of 3.05% reflects a capital value of .£610 per sq ft after costs.

John Burns, CEO of Derwent London, said Angle Square 'provides short-term asset management opportunities, and longer term we expect to reposition the buildings replicating our successes in nearby properties'.