West Midlands Pension Fund (WMPF) has acquired more central London office space after buying a property in the City for £25m.
WMPF bought St Andrew’s House at 18-20 St Andrew Street in partnership with ING Real Estate Investment Management (INGREIM). The multi million-pound price tag reflects a yield of 6.6 per cent.
The 10-floor property is in the Midtown district. It was built in the 1980s and offers 51,000 sq ft of space in a prime location with good transport links.
The building sits not far from New Street Square, the successful Land Securities development opposite the proposed site of Goldman Sachs’ new headquarters, ING REIM said.
It added that the acquisition offers excellent prospects for growth, highlighting its proximity to the Farringdon Crossrail/Thameslink station.
The building is currently leased on a floor-by-floor basis, with the current occupier – accountancy firm PwC – signed up for another two years almost.
Mike Daggett, ING REIM fund manager for WMPF, said: “West Midlands has a strong and diversified portfolio and is comfortable taking on asset management opportunities such as this.
“The purchase of St Andrew’s House adds to the fund’s existing West End holdings and will enable the fund to take full advantage of the anticipated out-performance of central London offices over at least the next two or three years.
“The property generates an attractive running yield and provides various options in the medium term for value enhancing asset management, ranging from lease re-structuring to a full refurbishment and the addition of a new floor.”
WMPF and INGREIM were represented by Cushman & Wakefield, which recently released figures showing office leasing activity in the third quarter in the capital.
The period saw more than two million sq ft leased across the City, the Docklands and the West End, the figures showed. This was a year-on-year rise of 54 per cent for the three-month period.
When compared with the second quarter, take-up rose nearly 75 per cent thanks to four 50,000 sq ft-plus deals being arranged. Supply stood at 12 million sq ft in the City and Docklands over the third quarter, the figures showed.
Next year some one million sq ft of office space is expected to be completed in the area.