British commercial property development company Landsec has sold the One New Street Square office building in Central London to Hong Kong-based property developer Chinachem Group for £349.5 million.
Landsec said on Friday that the sale price compares to a September 2022 valuation of £362.8m and crystallises a total return on capital averaging 10% per annum since its acquisition of the site in June 2005 and 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 £16.8m.
The disposal proceeds will initially be used to repay debt and, on a pro-forma basis, would reduce Landsec’s LTV from 31.1% to 28.9% based on September 2022 valuations, the company said.
Marcus Geddes, Managing Director, Central London at Landsec said: “One New Street Square is a premium 276,502 sq ft 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, said: “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.”
He added: “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.”