Fidelity International has completed an investment in central London offices being sold as part of an exit by WeWork Capital Partners, which assembled a number of office properties for its flexible office model in the UK during its heyday several years ago.
WeWork Capital Partners agreed a price with Fidelity International earlier this year for 99 Queen Victoria Street and has now completed, providing Fidelity with a debut investment for its Article 9 Fidelity Real Estate Climate Impact Fund.
The acquisition price was not revealed, though Savills has stated the long leasehold has been bought for around £48 mln (€55 mln), a 31% discount to the £70 mln asking price first sought last year and reinvigorated as a sales process in 2023.
Cushman & Wakefield and James Andrew International acted for the seller and purchaser respectively.
Fidelity said in a statement it planned to begin refurbishment in early 2024 with completion expected in 2025 to provide workspaces.
The new design will provide ‘simplified and clear floorplates across all levels that are fit for modern day use’. Refurbishments will focus on improving energy efficiency, including the removal of gas equipment, installation of new air source heat pumps and a new building management system. New tenant amenities will be provided at lower ground floors with cycle parking, EV chargers for bikes and scooters and showers.
The new accessible terraces and amenity spaces will be created as part of the proposals with panoramic views across London’s financial quarter and beyond. As part of these terraces, planting will be comprehensively integrated, vastly increasing the building’s Urban Greening Factor and supporting the target of BREEAM Excellent.
Fidelity’s fund has a value add profile seeking retrofits that subsequently have the potential to significantly increase capital value. Refurbs focus on accelerating the net zero carbon ‘pathway’ on each asset.
Neil Cable, head of European real estate investments at Fidelity International, said: ‘While investors can buy new assets built to higher environmental standards, the biggest scope for achieving impact lies in the buildings that exist today, most of which are expected to still be around by 2050. Refurbishing and retrofitting these buildings can both reduce the carbon footprint of our built environment and improve the wellbeing of those who use them.’
‘Turning brown to green also presents a significant investment opportunity as there is currently a chronic undersupply of net zero carbon space versus occupier demand, resulting in a green premium. This structural mismatch will erode over time, but we believe the next five to seven years represent a rare opportunity to deliver disproportionate returns for carefully managed development risk.
‘99 Queen Victoria Street is one of a series of investments in the pipeline for our new Fidelity European Real Estate Climate Impact Fund.’