British Land sells 75% interest in West End office portfolio for £401m

British Land sells 75% interest in West End office portfolio for £401m

British Land has agreed to sell a 75% interest in a portfolio of three office buildings in the West End, London to Allianz Real Estate for £401m.

The transaction represents a blended net initial yield of 4.32% and is expected to complete in January.

The West End portfolio includes three buildings, 10 Portman Square, Marble Arch House and York House, all of which are in Marylebone. 10 Portman Square comprises 134,000 sq ft of high quality, multi-let office space on Portman Square. Marble Arch House is a 76,000 sq ft office-led building close to Marble Arch station and opposite York House, which is 100,000 sq ft of primarily office space with 22 residential apartments.  The office tenants at York House include British Land and we have signed a new ten year lease on our space.

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British Land will form a new joint venture with Allianz, with British Land’s interest at 25% and Allianz’s at 75%.  British Land will continue to manage all three West End buildings and will receive an asset management fee.

“Having delivered outstanding office space and attracted high quality occupiers, we are thrilled to have secured Allianz Real Estate as our partner and crystallised significant value for shareholders. This transaction demonstrates that like us, investors remain confident in the long term prospects for high quality assets in prime London locations,” said Simon Carter, Chief Executive, British Land.

“We are delighted to be working with such a respected partner in British Land. This transaction represents a great opportunity to invest in prime assets in a global city on behalf of our Allianz clients thereby broadening our UK investment portfolio,“ said Kari Pitkin, Head of Business Development for Europe at Allianz Real Estate.

The assets had a combined valuation of £508m (at 100%) at 30 September and the total net rent attributable is £21.1m. Prior to any reinvestment the transaction will reduce underlying earnings per share by around 1.4p and LTV by 2.7%.