Landsec closes sale of premium London office development for €398m

The sale price reflects a 10% average annual return on capital since Landsec acquired the site in June 2005 and its subsequent redevelopment in 2016.

One New Street Square is fully let to Deloitte, with a 14-year unexpired lease term remaining and a current annual net rent of £16.8 mln (€19.1 mln).

Knight Frank advised Landsec, while Chinachem Group was advised by Savills.

Marcus Geddes, managing director, Central London at Landsec said: ‘One New Street Square is a premium 25,688 m2 London BREEAM ‘Outstanding’ office development, which was completed in 2016 and fully let to Deloitte during construction on a 20-year lease. This represents a clear demonstration of our strategy in action and our strong customer relationships. Through this sale we have been able to unlock capital at a rate that has provided strong returns over our 18 years of ownership. Crystallising these returns enables us to turn towards future opportunities and future growth through balance sheet strength and flexibility.’

Donald Choi, executive director and CEO of Chinachem Group, commented: ‘We’re delighted to have acquired One New Street Square successfully as it is located in the strategic Central London area with best-in-class building specifications and attractive returns. This is an important step forward for the Group and we intend to hold this property for long-term investment. While Hong Kong will remain our home and core market, we intend to incrementally increase the Group’s exposure in gateway cities of major developed markets, so as to fulfil our business diversification objectives and build a resilient, long-term income stream.’

The disposal is in line with Landsec’s strategy to recycle capital out of mature London offices over the medium term.

The proceeds will initially be used to repay debt and possibly for reinvestments in higher-return opportunities in the future.