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SWIP and TIAA tee up £225m City trophy sale

By James Buckley - Thursday, July 05, 2012 15:30

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Teachers Insurance and Annuity Association of America and Scottish Widows Investment Partnership (SWIP) has appointed GM Real Estate and Jones Lang LaSalle to sell a £225m trophy office tower in the heart of the City, CoStar News can reveal.

The pair is to put its 5 Aldermanbury Square, EC2, on the market for around £225m, reflecting an initial yield of 5.25%.

The sale of the 270,000 sq ft block will be a welcome addition to the investment market given the lack of trophy assets currently openly available in the Square Mile.

The building is well let to strong covenants, with Fortis becoming the first tenant to occupy the prime property, agreeing in 2006 to take 156,000 sq ft as its new City of London headquarters, comprising levels 1 to 9 and levels 17 and 18. The bank took a lease for a term of 20 years.

The building is now home to BNP Paribas and BNP Paribas Real Estate, which moved its London operations there in 2010.

In 2002, Teachers Insurance and Annuity Association tied up a deal to buy a 50% stake in three of Scottish Widows’ large London developments, including 5 Aldermanbury Square, which was at that time known as Royex House prior to a large scale redevelopment.

It paid £72.9m for three schemes, which also included Fleetway House on Farringdon Street, and in the West End, Stratton House, on Stratton Street W1.

5 Aldermanbury Square is the second asset Teachers has brought to market in London’s financial district in as many months. In May, TIAA instructed Jones Lang LaSalle to sell its 360,000 sq ft interlinked buildings at 1&7 Westferry Circus in Canary Wharf, E14, as revealed by CoStar News.

The US fund has reportedly received strong interest for the assets, which it is selling for £155m, reflecting a yield of 8.14%, or £384 per sq ft.

Eric Parry was appointed in 2001 to work up a masterplan for a new 18-storey building to replace replace Royex House adjacent to London Wall, and the scheme was completed in 2007.

All parties declined to comment.

jbuckley@costar.co.uk