This Week's London Deal Sheet
The Deal Sheet is a weekly compilation of Greater London and beyond's biggest leases, sales, financing deals, construction updates and personnel moves. Have news you’d like to submit? Email mark.faithfull@bisnow.com.
Pension Insurance Corporation, a specialist insurer of defined benefit pension funds, has agreed the £268M purchase of 2 Ruskin Square in Croydon, a new 345K SF grade-A office, next to East Croydon railway station, from the Schroders Capital UK Real Estate Fund.
The building will be let to the Government Property Agency and is due for Category A completion in June 2023, ready for service August 2024. It has been specifically designed for occupation by the Home Office, which will accommodate approximately 3,000 civil servants relocating from historical locations around Croydon.
Once completed the building aims to deliver a BREEAM rating of ‘Outstanding’, having been uplifted from a previous target of ‘Excellent’, along with achieving a 15% reduction in embodied carbon during construction.
INVESTMENT
Landsec has secured 100% ownership of St David’s shopping centre, Cardiff, following its purchase of the debt secured against the 50% share of the asset previously owned by intu.
Comprising separate transactions with two debt holders, the overall purchase price represents a discount to the £113M September 2022 book value of Landsec’s existing 50% share of the centre, with a net initial yield of 9.7% and an equivalent yield of 9.7%.
In the last 18 months, several brands have relocated to St David’s from elsewhere in the city, agreed to open new stores or upsized their existing stores, including Zara, Ivy Asia, Gaucho, Footasylum and The Fragrance Shop.
Via a separate deal, Landsec has also acquired the adjacent vacant Debenhams store for a minimal sum. This will introduce new public spaces, elevated F&B/leisure concepts and a refreshed brand mix, and is expected to deliver a high single digit income return on incremental capex, said the company.
“Acquiring this final stake in St David’s enables us to take forward our placemaking plans for what is the dominant retail destination in Wales,” Landsec Managing Director Bruce Findlay said.
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Malaysian investor Gamuda and Castleforge Partners, a UK-based real estate private equity investor, have bought the eight-storey City of London office building Winchester House for £257M.
The construction and property group and its partner, via Venta Belgarum II, have signed a sale and purchase agreement with Wessex Winchester to acquire 100% equity interest in Wessex Winchester Propco, the owner of the 317K SF Winchester House.
Gamuda’s wholly-owned Gamuda Land (Labuan) holds a 75% stake in VB II, while Castleforge’s wholly-owned partnership entity Athelstan owns the remaining 25%.
Post-acquisition, Gamuda said it plans to refurbish and upgrade the property into a “best-in-class, top-rated environmentally sustainable ESG office space”.
“Gamuda intends to dispose of this investment by the fifth year or prior, after locking in strong pre-lease arrangements by quality tenants,” the company added, noting that the Winchester House is Deutsche Bank's current London headquarters, with its lease due to expire in April 2024.
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Harrison Street had expanded its build-to-rent joint venture with Apache Capital and NFU Mutual to fund Moda Living’s Great Charles Street development. The announcement marks the largest regional BTR funding deal currently completed in the UK, the JV said.
The £302M gross development value Great Charles Street scheme in Birmingham will be developed on a former brownfield site. The scheme will deliver 722 new homes, a mix of spacious studios to three-bedroom BTR apartments, with views over Birmingham’s Jewellery Quarter.
Amenities at Great Charles Street include a rooftop terrace and BBQ areas, a gym with personal training and classes, bicycle storage, a washing and repair station, residents’ lounges, private dining, a cinema room, meeting rooms and coworking space, secure parking, a 24-hour concierge and on-site security.
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LondonMetric Property has exchanged on the sale of five assets in two transactions for £34.8M, reflecting a net initial yield of 5% and a 4% discount to 30 September 2022 book value.
Four of the assets have been sold as a portfolio for £25.5M, including 82K SF in Coventry, 42K SF in Warrington, 37K SF in Golden Cross, Birmingham, and 37K SF in Redfern, Birmingham.
In a separate transaction, LondonMetric has sold an additional 91K SF unit in Coventry for £9.3M.
“These assets have performed well since acquisition and support our early macro call into urban logistics. Our disposals over the last 12 months now total £250M,” LondonMetric CEO Andrew Jones said.
DEVELOPMENT
Related Argent and real estate investment manager Invesco Real Estate, acting on behalf of a U.S. separate account client, have confirmed two contractor appointments and finance enabling over 350 build-to-rent and market sale homes to be built as part of the £8B Brent Cross Town development.
Galliford Try and Midgard, with financing from ICG Real Estate and Barclays Bank, will deliver the homes, continuing the growth of one of the UK’s largest net-zero towns.
Brent Cross Town has five buildings underway that will be completed from the end of 2024. In total, nearly 650 affordable, market sale and BTR homes are on-site along with 662 student rooms in partnership with Fusion Students. Sheffield Hallam University will also open its first campus outside Yorkshire at Brent Cross Town.
The development is being delivered in partnership between Related Argent and Barnet Council, and it will create nearly 7,000 new homes, 3M SF of offices, a high street and schools surrounded by 50 acres of parks and playing fields including the new 4.5 acres Claremont Park completed last year.
OCCUPIERS
Grosvenor has confirmed private equity investor Oakley Capital as the sole occupier of its 26.5K SF Holbein Gardens, London.
Oakley Capital, a pan-European private equity group, will be occupying the building from early next year and has signed a green lease for the all-electric building, which will be powered by renewable energy.
Holbein Gardens is a redevelopment and one-storey extension of a 1980s office building near Sloane Square, setting a new benchmark for sustainable workplaces and Grosvenor’s first net-zero office development. The project centres on retaining the existing four-storey structure, innovative reuse of materials and the introduction of extensive greening.
Designed by Barr Gazetas, it is the first scheme to apply Grosvenor’s Sustainable Development Brief, which is based on best practice from current certification schemes and Grosvenor’s sustainability targets.
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Deliveroo’s rapid grocery delivery service, Deliveroo Hop, has signed a seven-year lease for a new 3K SF warehouse at SEGRO’s Acton Park Industrial Estate, which forms part of the company’s Park Royal portfolio in north west London.
The new facility expands Deliveroo’s existing presence at Acton Park, where it already operates its ‘additions’ business for its core online takeaway delivery service, bringing the total occupied space to 11.7K SF.
The lease was confirmed following a major refurbishment of the unit to provide additional features including a new roof, LED lighting, an electric boiler and EV charging.
“We want to maintain a diverse customer base in our warehouses and it is particularly rewarding that we have been able to adapt and improve the sustainability of an existing unit to help enable Deliveroo [to] grow with us and expand its offering to thousands of people in the West London market,” SEGRO Managing Director, Greater London, Alan Holland said.
HOTELS
Travelodge, which operates nearly 600 hotels, is writing to 220 Local Authorities across Britain proposing a joint development partnership to stimulate regeneration and facilitate further growth.
This letter outlines the “pivotal role” that Travelodge has been playing for the last 10 years in supporting Local Authorities in England, Wales and Scotland by: being a key player in their local regeneration and growth programmes; creating jobs; attracting new visitors; and providing a solid long-term income stream for the Local Authority as they have invested in the development of the Travelodge hotel and are the landlord.
Travelodge has identified that it can expand its UK hotel network with a further 300 target locations for new hotels, which could represent an investment of around £3B.
