GAW drops £500m in West End mega deal

By James Buckley Chris Borland - Thursday, October 15, 2015 9:28

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A GAW Capital-led consortium is to buy an interlinked 480,000 sq ft office development let to Google for around £500m, in what will be the largest single asset investment deal in the West End for more than two years, CoStar News can reveal.

GAW is fronting a consortium alongside other private Asian investors to buy 123-151 Buckingham Palace Road in London’s Victoria, SW1, for a net initial yield of just over 5%.

Contracts have exchanged on the off market deal on which Hong Kong-based GAW is acting as adviser and co-investor, and which is due to complete in around a month.

123 and 151 Buckingham Palace Road are interlinked but effectively two separate assets. Last year San Francisco-based fund manager Divco West, advised by London Global, agreed to buy 123 Buckingham Palace Road for around £200m.

Earlier this year it emerged that London Global, set up by GN2 partner Charles Godfrey and former Royal Bank of Scotland Global Banking Markets executive Paul Aubery, was attempting to piece together another deal to wrest control of neighbouring 151 Buckingham Palace Road, again on behalf Divco West, from Malaysian hajj pilgrims fund Lembaga Tabung Haji.

It is thought that London Global will be retained to asset manage the entire development.

The deal could provide the GAW-led consortium with the option to combine both assets and deliver circa 500,000 sq ft of refurbished or redeveloped space to the supply-starved West End market. However, no decisions have yet been made on future plans for the two buildings.

Lembaga Tabung Haji quietly began testing the market in March over the potential sale of its prime Victoria asset, 151 Buckingham Palace Road, for around £250m, reflecting an initial yield of 5%.

Lembaga completed its acquisition of the Victoria asset from Ivanhoé Cambridge in March 2013. A price of £205m was agreed which equated to a yield of just under 7%.

Westbrook Partners put the 250-year leasehold interest in the 203,000 sq ft 123 Buckingham Palace Road up for sale in 2013 for £185m.

Around 97% of the income on the property comes from office tenants Google, PA Consulting, Eni and Sky Media. The property comprises 193,000 sq ft of offices and circa 10,000 sq ft of retail space.

In September 2006, Westbrook bought 123 Buckingham Palace Road in a £170m sale and leaseback deal with PA Consulting. As part of the agreement, PA took a new 20-year lease on the space it occupies at a rent of £50 per sq ft.

In March 2011, Google signed up to take a further 40,000 sq ft of overflow space at 123 Buckingham Palace Road, while pursuing plans for its new Kings Cross campus. The internet search giant now occupies 78,000 sq ft in the building.

Eastdil Secured acted as adviser to Divco West and London Global on the sale of 123 and 151 Buckingham Palace Road.

All parties declined to comment.

jbuckley@costar.co.uk & cborland@costar.co.uk

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