Shanghai's Million Cities closes £140m City deal

By James Buckley - Tuesday, January 09, 2018 14:14

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Shanghai-based investor Million Cities International has completed its purchase of 99 Gresham Street in the City of London from LGIM Real Assets for more than £140m.

The investor, controlled by businessman Hanxiang Yu and advised by Savills, is thought to have paid around £142m for the office block, reflecting a yield of 4.1%, which reflects a capital value of nearly £1,500 per sq ft. The deal was first revealed by CoStar News in November.

The building was launched for sale last year before subsequently receiving strong investor interest. After first round bids were called towards the end of October, bids in in excess of £135m were received. The eventual sales price of £142m represents a significant premium on the quoting price of £129m, which reflected a 4.5% yield.

L&G acquired the 95,000 sq ft 99 Gresham Street from LaSalle Investment Management in 2006 for £95m.

The building was recently refurbished and provides space over basement, lower ground, ground and six upper floors. It has been let to five office tenants, including Xbridge Ltd, China CITIC Bank, NHS Property Services and Curtis Mallet-Prevost Colt & Mosle as well as five retail occupiers and one leisure operator.

The building produces a passing rent of circa £5.92m per annum with an average weighted unexpired lease term of over seven years.

Craig Westmacott, senior fund manager at LGIM Real Assets, said: “This sale is testament to our team’s excellent asset management delivery which has revitalised this Central London office building, attracting both new office and retail tenants, and in turn creating a prime trophy investment asset. The investor interest received is a healthy barometer of the Central London investment market.”

Patrick Cryer, director of capital markets at JLL, which advised L&G, said: “The sale of 99 Gresham Street reiterates the strength of the prime City of London office investment market and demonstrates the demand for well let core trophy assets. Legal & General pursued a comprehensive high-quality refurbishment in 2016 as well as repositioning the ground floor to provide a further four retail units along Coleman Street.

“Subsequent to this JLL’s City agency team was able to achieve a number of high profile office lettings within the building. This sale reflects the benefits of understanding changing local market dynamics and executing a bold and active asset management plan.”

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