Secure Income REIT has announced that it has exchanged contracts for the sale of the London property occupied by Madame Tussauds to Taiwanese investor Fubon Life, in a deal worth £332.5 million.
Madame Tussauds has occupied the property for the past 130 years, and the attraction’s owner Merlin Entertainments, has a lease with 27 years left to run. At that point, Merlin has the opportunity to extend the lease by a further 70 years – bringing the potential tenancy length to almost another century.
Secure Income REIT chairman Martin Moore believes that the deal, which marks the first ever time the property has been sold individually on the open market, ties in well with the firm’s long term goals.
He says; “While we have a strong tie to this internationally iconic building, from a management perspective we realise that having such a large single property exposure unbalances the spread of assets in our portfolio.
“We are pleased to be selling at a satisfactory premium to the most recent valuation, which is less than five months old.
“Our strategy remains firmly to invest in and hold high quality assets which generate very long term income from exceptional tenants.”
The contract price represents an 8 per cent premium to the £309.3 million valuation of the property undertaken in December 2014, and will be partly applied to debt repayments with the balance held for general purposes.
The Marylebone Road property currently generates £15.7 million a year in rental payments, with the terms of the lease guaranteeing upward only rent reviews geared to RPI.
The sale marks the third move into London’s commercial property market for Fubon Life Insurance, which has taken advantage of the decision by Taiwanese regulators to relax restrictions upon insurers seeking to purchase overseas properties and foreign currency bonds.
In addition, the firm has acquired Bow Bells House on Bread Street for £197 million and Two Old Change Court for £138.8 million, indicating a strong desire to snap up desirable sites in the City of London’s financial district.
Completion of the sale of the Madame Tussauds building is expected in the third quarter of 2015.
