GPE sells Intesa Sanpaolo's London office

Great Portland Estates has exchanged contracts to sell Intesa Sanpaolo's London office at 90 Queen Street, for £61 mln (€70 mln), reflecting a net initial yield of 5.39% and 1.7% ahead of the June 2013 valuation.

The purchaser is a vehicle owned and managed by Warburg-Henderson.

Completion will take place on 20 December 2013, or earlier at GPE’s option.

The 68,438 sq ft (6,360 m2) property is fully let, primarily to Intesa Sanpaolo (85% of the income) and two retail tenants, producing £3.48 mln per annum. The property is held majority freehold.

GPE purchased the property in 2009 for £45.8 mln and subsequently restructured Intesa’s lease extending its term certain by seven years. The current weighted average unexpired lease term of the building is around 7.5 years.

'90 Queen Street was the first acquisition following our 2009 rights issue, timed to allow us to take advantage of the then severe property market distress,' said Toby Courtauld, GPE Chief Executive. 'Having restructured the leases, this sale crystallises the strong performance we have enjoyed since acquisition and delivers an ungeared IRR of 13% per annum.'

Martin Payne, fund manager at Henderson, who is responsible for the JV's investment in the UK markets commented: 'We have acquired a strong asset with good income potential from a strong covenant paired with a prime City of London location. We will now be widening our net in search of quality well-let assets elsewhere in the UK.'

Henderson was advised by Montagu Evans and Osbourne Clarke. GPE was advised by GM Real, Strutt & Parker and BLP.