Acquisitions and Sales of £107 Million
Great Portland Estates PLC
2 November 1999
ACQUISITIONS AND SALES OF £107 MILLION BY
GREAT PORTLAND
In three separate transactions totalling more than £107 million, Great
Portland Estates have increased the concentration of their investment
portfolio in Central London offices and major shopping centres by £73 million
through the acquisition of Barnard's Inn, Fetter Lane, E.C.4, and the Quedam
Centre, Yeovil, for £35 million and £38 million respectively, whilst
simultaneously disposing of 8 individual shop holdings for over £34 million.
Developed in 1992 by The Mercers Company, Barnard's Inn comprises 105,400
sq.ft. of air-conditioned offices principally let to MCIWorldcom for 15 years
from March this year with a break in 2010. The acquisition at a nominal rent
of a 140 year ground lease, allowing scope for redevelopment, will give Great
Portland a net initial yield of 7.7% from a current total income of £2.78
million per annum and adjoins their existing holdings at Dyers Buildings,
Holborn and Norwich Street. The combined ownership now extends to more than
260,000 sq.ft. of offices producing a total income of £5.8 million per annum
on a site of some 1.5 acres opposite the new 335,000 sq.ft. Holborn Place
Headquarters being developed for Anderson Consulting. Ingleby Trice Kennard
advised Great Portland and DTZ acted for The Mercers Company.
The Quedam Centre is the focus for prime shopping in Yeovil and its catchment
area, and provides a total of 163,000 sq.ft. in 43 units with an anchor store
for BHS. Marks & Spencer, Woolworths and Boots have retail frontages to the
scheme and over 88% of the total income of £2.6 million per annum is derived
from national multiple covenants including Superdrug, Iceland, Burtons, Etam,
Littlewoods and River Island. The net initial yield of 6.6% is expected to
rise to more than 7% within 12 months following the settlement of rent
reviews, and the freehold purchase price reflects a true equivalent yield of
7.5%. Strutt & Parker acted for Great Portland and the vendors, Standard
Life, were represented by Colliers Erdman Lewis.
The rationalisation of Great Portland's property portfolio by the disposal of
non-core assets has been further advanced with the sale of shops in
Blackpool, Brighton, Chelmsford, Northampton, Preston, Sheffield, Slough and
Stevenage. The total current income of £1.96 million per annum shows an
average net exit yield of 5.4% and reduces the proportion of retail property
outside London, other than shopping centres, from 4.2% in March this year to
2.0%. The purchasers, Royal & Sun Alliance, were advised by Knight Frank and
Healey & Baker acted for Great Portland.
Patrick Hall, Deputy Managing Director, said:
' Barnard's Inn is a particularly important acquisition as it effectively
completes the assembly of a strategic holding where the combined ownerships
should produce further value over the medium term. The Quedam Centre also
offers the prospect of growth from modest rental levels, as well as
enhancement opportunities through amalgamation and extension of units to
satisfy retailer requirements.
The sale of 8 small shops has significantly reduced our non-core holdings,
and produced £1.5 million by way of a healthy combination of trading profit
and valuation surplus.
The combined effect of these transactions is to halve our holdings in non-
core retail assets, at the same time raising to almost 60% the percentage of
our portfolio in the favoured areas of Central London offices and shopping
centres.'
Enquiries:
Patrick Hall, Deputy Managing Director 0171 580 3040
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