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City Corporation seeks £55m sale of Square Mile assets

By James Buckley - Monday, May 28, 2012 15:00

Main news image
The City Corporation has appointed Allsop to sell two prime assets in the Square Mile, less than two months after buying them from Valad.

The Corporation is selling the long leasehold interests in 20 Finsbury Circus and 42 New Broad Street, both EC2, for a combined £55m. The two buildings total around 108,000 sq ft of office space.

Norwich Union sold the long leasehold interests in the two buildings as part of a portfolio, which also included 15-17 Eldon Street, EC2, to Valad in 2008. Valad then sold the interests in all three properties in March to the Corporation, which has historically owned the freehold.

To limit the reduction in rental income which will result from the sale, the Corporation will retain the freehold interest in the Eldon Street asset.

Allsop is currently marketing the 22,843 sq ft New Broad Street property for in excess of £11.1m, reflecting a net initial yield of 7.87%, and is expected to bring the 85,000 sq ft 20 Finsbury Square to market for around £44m within the next two weeks.

The larger Finsbury Circus building is let to Deutsche Bank until 2015 at a rent of £4m pa. The building, which will be the closest building to the new Liverpool Street Crossrail station, has the potential to add additional space, particularly retail on the ground floor.

The Corporation is selling the two assets with a new lease and a revised 10% gearing, rather than the 40% of total income it used to receive under its previous ownership of the buildings.

42 New Broad Street (pictured) was constructed in 1990 and arranged over lower ground, ground and five upper floors. The Mayor and Commonalty and Citizens of the City of London will grant a new long leasehold interest for a term of 125 years from completion at a current head rent of £102,669 pa.

The property is let in its entirety to Swedbank AB on a 25 year lease expiring on the 28th September 2015. The current total rent passing is £1.03m pa, equating to £44.94 per sq ft overall. The property is sub under let to six tenants on leases expiring on 28th September 2015.

The property is not listed but is situated within the New Broad Street Conservation Area.