London-headquartered Mayfair Capital, an investment subsidiary of Swiss Life Asset Managers, has acquired an office asset in central London for £112.5 mln (€124 mln) from Legal & General.
Located in the Shoreditch submarket, the deal reflects a net initial yield of approximately 5%, according to Mayfair Capital.
The Bonhill Building provides 113,000 ft2 (10,500 m2) of office space across the basement, ground and six upper floors. The 1960s asset was refurbished in 2017 and is currently multi-let to seven tenants, with a weighted average unexpired lease term of approximately 7.5 years. Mayfair said there was potential to increase the average office rent of £54 per ft2.
Giles King, fund manager at Mayfair Capital, said: 'The Bonhill Building meets a number of our thematic investing criteria – tech connectivity, transport infrastructure, clustering of tech businesses and wellness. Along with an attractive yield of 5%, we see potential for further growth in the office rents.
'The acquisition case was strengthened by our expectation London will remain a popular destination for talent and occupiers regardless of the Brexit outcome.
'Much of the global city’s attraction is tied to factors independent of the UK’s EU membership – location, time zone, language, workforce, infrastructure and culture. So far London has proved very resilient, with strong job creation and new commitments from international corporates – such as Google,' King added.
'Having acquired the asset in 2014 for £62.6 mln, this sale marks the conclusion of a highly successful asset management programme and supports our fund strategy to seek undervalued sectors,' said Matt Jarvis, senior fund manager of the UK property fund at Legal & General.
The burgeoning market of Shoreditch - benefitting both from its proximity to the City and to the tech cluster around Old Street - has been the target of a number of recent deals. Dalata Hotels this week unveiled plans to acquire a hotel development site there, while UBS announced the sale of a modern office asset.
Mayfair Capital became part of Swiss Life in November 2016. The deal marks the specialist UK real estate investment manager’s largest acquisition to date.
Colliers advised the vendor, Legal and General, while Knight Frank advised Mayfair Capital.