CoStar UK - The Leader in Commercial Property Information

Workspace makes £158m play for City office

By James Buckley - Wednesday, June 07, 2017 15:36

Main news image
Lone Star has agreed a deal to sell its Salisbury House asset in the City of London to flexible business space provider Workspace for around £158m, CoStar News can reveal.

Workspace will add to its roster of 68 properties in London, totaling 3.6m sq ft, with the acquisition of the long leasehold interest in the building at 28-31 Finsbury Circus, EC2.

Lone Star instructed JLL in March to sell the property for £155m, reflecting a net initial yield of just over 6%.

It is understood that Workspace fended off competition from the likes of AEW and QSuper, as well as a Middle Eastern investor. A bid of £157m - over the asking price – was turned down in favour of Workspace’s offer.

Salisbury House sat in the £1bn ‘Project Laser’ mixed-use UK portfolio of secondary properties which Lone Star bought from Moorfield in 2015.

RBC and Wells provided a three-year £593m whole loan to finance the deal on a 50:50 split at a loan-to-cost (LTC) of approximately 70%.

The 244,478 sq ft building is let off average rents of £63.25 per sq ft and is multi-let to tenants including Druces, AMX Communications, The Light Practice, Pitman Training and The CityUK.

The nine floor property, located on the north side of London Wall, has retail space on the ground floor with office space on the upper eight floors.

Workspace Group today reported rises in its rent roll and trading profits in its full year results for the year ending 31 March 2017 as it said demand for its flexible London business space offer was increasing among all business sectors.

Workspace said the period had seen strong growth in net rental income up 6.9% to £79.2m, resulting in a 15.5% growth in adjusted trading profit after interest to £50.7m

Profit before tax of £88.8m was lower than 2016 due to a smaller uplift in the property valuation EPRA net asset value per share of £9.53 was up 3.3%.

All parties declined to comment.

Get in Touch
+44 203 205 4600