UK asset manager M&G has purchased the freehold of 78/92 Great Portland Street and 15/19 Riding House Street in London from Great Portland Estates (GPE) for £49.6 mln (€57 mln), reflecting a net initial yield of 3.9%.
After deductions for outstanding tenant incentives and rental guarantees, the net price is £48.3 mln, ahead of the September 2017 book value.
'The redevelopment of 78/92 Great Portland Street and 15/23 Riding House Street has not only delivered new Grade A offices and retail units, but also satisfied the off-site residential planning requirements for other successful schemes including 30 Broadwick Street, 55 Wells Street and Rathbone Square,' said Hugh Morgan, director of investment management at GPE.
'With the commercial buildings now fully let and our business plans complete, the sale continues our strategy of recycling capital out of mature assets.'
The property includes 18,100 ft2 (1,682 m2) of offices let to a non-profit organisation until May 2027 at an annual rent of £1.2 mln; seven retail units totalling 11,400 ft2 let at combined rents of £0.5 mln per annum; plus six vacant residential apartments and two flats let on assured shorthold tenancies.
The current contracted rent is £1.8 mln per annum and a one-year rental guarantee of £0.3 mln was provided on the vacant residential.
GPE will retain a 999-year interest in nine new apartments at 80 Great Portland Street and 15/19 Riding House Street which are currently being marketed for sale.