Ropemaker buys office in London at 8.75% yield

Ropemaker Properties, the property holding company of BP Pension Fund, has acquired 200 Hammersmith Road, London from BlackRock's UK property fund for £24.55 mln (EUR 29 mln). CB Richard Ellis, which acted for Ropemaker, said the transaction volume reflected an initial yield of 8.75%.

The broker added that 200 Hammersmith Road is considered to be one of the highest quality multi-let office buildings in West London. The property was developed by Helical Bar in 2003 on the site of the former Hammersmith Hospital. The property totals 6,200 m² and is multi-let to seven tenants including Luxottica, Etihad Airways, Western Union and Acergy MS.

Guy Bishop, Director of Regional Investment, CBRE, said: 'Centrally located Grade A multi-let offices buildings are in short supply in Hammersmith, and we were delighted to fulfil BP's requirement for this asset type through the purchase of 200 Hammersmith Road. We believe that demand and therefore pricing for this quality of asset will improve in due course, and the acquisition offers BP extremely good value'.

Tim Hayne, Head of Property at BP Pension Fund, commented: ' We believe the fundamentals of the Hammersmith office market make it well positioned in the current challenging occupational market. Ropemaker Properties has now competed acquisitions on over £400 mln of assets across the UK in the past 15 months.'

According to CBRE's recent report, Beyond the Crunch: Effects on UK Office Markets, London's competitiveness as a centre for business has been less affected by the global financial downturn compared with others and financial services will continue to be the key driver of economic growth. The UK has seen the most rapid repricing of any market, illustrated by the increased amount of equity focused on London in particular, which supports the purchase of 200 Hammersmith Road by Ropemaker.

BlackRock was advised by Knight Frank on this transaction.