Hong Kong investor Tai United Holdings has sold 10 Hammersmith Grove in West London for £112m in what is the third time the property has traded in the last 12 months, CoStar News can reveal.
The building has been bought by Blue Horizon Investors, a private investor, which is paying a net initial yield of around 5%.
Tai United, a Hong Kong-listed group which is more used to trading medical equipment and mining tungsten in Mongolia, bought the building last November from Brockton subsidiary Leon Property Holdings for £103.5m, reflecting a net initial yield of 5.33% on the SPV and a capital value of £843 per sq ft.
The uplift in price paid by Blue Horizon will be seen as a reflection of the demand for well-let and under-rented assets in West London. Ten Hammersmith Grove is let off average rents of £47 per sq ft – highly reversionary given that lettings have been agreed at neighbouring 12 Hammersmith Grove for £59 per sq ft, with other deals in negotiations at £58.50 and £57 per sq ft.
The 2013-built HQ building Ten Hammersmith Grove was one of a number of assets brought to market by Aberdeen Asset Management last July within its Aberdeen Property Fund after it suspended the Aberdeen UK Property Fund and the Aberdeen UK Property Feeder Unit Trust to provide time for investors to “consider their options in these exceptional circumstances”.
Aberdeen developed 10 Hammersmith Grove, the fully leased 122,744 sq ft office scheme with U+I before selling it to Brockton for around £89m.
The building, one of the most prominent in Hammersmith, is let to six tenants including Fox, UKTV, Philip Morris and Accor on 10- and 20-year leases and produces an annual income of £5.6m.
The next rent reviews are in 2018, 2019 and 2020, presenting Blue Horizon with the opportunity to drive value and enhance the running yield of the asset in a location that remains attractive to occupiers based on low occupancy costs.
Rob Corbett, director in JLL’s central London capital markets team, acted on behalf of Blue Horizon and said: “This is a prime example of JLL’s ability to identify new entrants to the market and deliver off market deals. Our relationships in the Middle East and Hong Kong were key to this transaction and paved the way for a smooth and successful deal.
“10 Hammersmith Grove provides a handsome cash-on-cash return with the ability to capture considerable reversion in the coming years. The property has never traded on the open market and yet it is one of the best buildings in the West End. This transaction represents good value and I’m confident it will perform well throughout the projected hold period.”