Global real estate investment manager LaSalle Investment Management has purchased the long leasehold interests of a prime West End government building, from Aberdeen Asset Management on behalf of a retained client.
3-8 Whitehall Place is a Grade II listed office building originally constructed in 1951 but which underwent an extensive renovation in 2004. This project saw the Portland stone face retained and a sixth and seventh floor added, along with an atrium, to provide 94,725 sq ft of flexible Grade A accommodation.
In total, the building benefits from seven upper floors, lower ground floor, ground floor and basement, with regular floorplates channelling high levels of natural light into the property.
This, along with a number of other environmental initiatives, has allowed the property to achieve a BREEAM rating of “Excellent”, while the extensive renovation works triggered the granting of the Sustainability Reward by the Royal Institution of Chartered Surveyors in 2005.
The off-market deal was struck between LaSalle and the Aberdeen Property Trust, a fund managed by Aberdeen Asset Management, and is worth £80.6 million in total. Aberdeen Property Trust fund manager James McLean believes that the deal was a good result for both parties.
He says; “The property was a good quality asset which surpassed our price target much earlier than we had envisaged due to the strong demand for office assets in the west end of London.
“The monies from the sale will be used to diversify the portfolio further and invest in long-term opportunities on behalf of our investors.”
3-8 Whitehall has 114 years unexpired on the lease, and is at present home to the Department of Environment and Climate Change. This tenancy agreement will last until 2029, although there is a break in 2021, and there is an upward only rent review scheduled for December 2016 which will see the £625,000 per annum rental income increase yet further.
The property lies within the Whitehall Conservation Area and is within a three minute walk of Embankment Underground Station, with Charing Cross mainline station is only a short walk away, providing access to major destinations throughout London and further afield.
Director of LaSalle Investment Management, Nick Howitt, says; ““3-8 Whitehall Place is one of the best buildings within the parliamentary estate and is let to a UK Government tenant with the strongest of covenants, which reflects our strategy to invest in larger, high quality assets as we continue to grow this portfolio.
“Investor appetite and competition for the best Central London assets remains strong and this asset is rare for its immediate sub-market offering the opportunity for both rental and capital improvement.
“Whitehall has traditionally been a hub for the British Government due to its proximity to the House of Commons, but the area is now starting to attract a broader set of occupiers – this is in part due to its position next to the popular commercial sub-markets of St James’s, Victoria and Covent Garden, but is also being driven by a number of redevelopments that are substantially improving the area for both office and alternative uses.”