Great Portland Estates offloads freehold on mixed-use London development

Great Portland Estates has sold the freehold of 78/92 Great Portland Street and 15/19 Riding House Street to M&G Real Estate, it announced on Monday.

The FTSE 250 company said the headline price of £49.6m reflected a net initial yield of 3.9% on a topped-up basis, and a capital value of £1,362 per square foot.

After deduction for outstanding tenant incentives and rental guarantees, the net price was £48.3m, ahead of the September 2017 book value.

The property comprised a mixed-use estate recently redeveloped by GPE, including grade A offices totalling 18,100 square feet let in their entirety to a not-for-profit organisation until May 2027 at a rent of £1.2m.

It also included seven retail units totalling 11,400 square feet, let at combined rents of £0.5m per annum, and six vacant residential apartments and two flats let on assured shorthold tenancies.

The current contracted rent was £1.8m per annum, and a one year rental guarantee of £0.3m was provided on the vacant residential.

GPE said it would retain a 999-year interest in nine new apartments at 80 Great Portland Street and 15/19 Riding House Street, which were currently being marketed for sale.

“The redevelopment of 78/92 Great Portland Street and 15/23 Riding House Street has not only delivered new grade A offices and retail units, but also satisfied the off-site residential planning requirements for other successful schemes including 30 Broadwick Street, 55 Wells Street and Rathbone Square,” said Great Portland’s director of investment management Hugh Morgan.

“With the commercial buildings now fully let and our business plans complete, the sale continues our strategy of recycling capital out of mature assets.”

The company also announced on Monday that it had signed a lease on its Hanover Square joint venture development at London's Bond Street Station.