Orchard Street makes GBP85m midtown purchase
Orchard Street Investment Management has exchanged contracts on the acquisition of 26 Red Lion Square from Legal & General Property (LGP) for GBP85.1m representing a net initial yield of 5.09 per cent.
Located in midtown, close to the junction of Kingsway and High Holborn and only 250 metres from Holborn tube station, the building is prominently located on the north east corner of Red Lion Square and has substantial frontage onto Theobalds Road.
Originally developed by Stanhope Kajima Developments in 1989, LGP recently concluded a GBP7m refurbishment of the property to create a contemporary headquarters office building. Comprising approximately 104,204 sq ft of Grade A office and ancillary accommodation, arranged over lower ground, ground and six upper floors, the asset provides flexible office floorplates (ranging from 11,000 sq ft to 17,500 sq ft) positioned around a central glazed atrium, together with a 2,040 sq ft retail unit fronting Theobalds Road.
Following the refurbishment, the offices are now fully let to four tenants, comprising Cable & Wireless, Group M (Mediacom), Haysmacintyre and TSL Education Ltd, on 10 year lease terms from 2013.
Additional works were carried out to improve the green credentials of the building and all leases now include green clauses.
Gary Felce, partner at Orchard Street, says: “This is a high quality multi-let office property located in a core market which we believe is set for further growth, supported by the proliferation of businesses moving to Midtown and the forthcoming Crossrail station which will be opening just a short walk away at Tottenham Court Road.”
Mark Russell, senior fund manager at Legal & General Property, says: “Since acquiring the property on behalf of the Managed Property Fund in 2010, we have undertaken an extensive asset management programme to both extend occupational lease terms and to increase rental values. Having very successfully executed these initiatives a sale of this asset now permits reinvestment into fresh opportunities.”
Savills acted for LGP and Cushman & Wakefield represented Orchard Street.
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