The UK arm of Japan's Nomura Real Estate has acquired a central London office building from income-focused UK REIT RDI for £59.25 mln (€67 mln).
The office property at 127 Charing Cross Road is being sold with planning permission in place for a 41.1% extension comprising the development of three additional floors.
The existing property is four storeys in height and was constructed in the 1970s. RDI acquired the asset as part of the AUK portfolio deal in March 2016 at a price of £42.6 mln. The firm noted that the disposal price reflects as 39.1% increase in value since acquisition, as well as a 1% premium to the 31 August 2020 valuation.
The sale generates a net initial yield of 3.1%, based on the contracted rental income, and a capital value of £1,481 per ft2 on the existing area.
Stephen Oakenfull, CEO of RDI commented:'This disposal marks the conclusion of a well-executed and successful asset management plan designed to enhance the value of an income generating asset.
'We believe that the sale captures a significant proportion of the asset’s potential value and provides us with the ability to recycle capital into opportunities with stronger risk-adjusted returns.
'In the meantime, the proceeds of this transaction further strengthen the balance sheet where we now have cash and available facilities totalling approximately £275 million to execute on our strategy.'
The mixed-use asset is currently let to office and retail tenants with a nightclub in the basement.
