JP Morgan Asset Management is preparing to offload its sprawling Bishops Square office development in the City of London for a blockbuster price of £850m as a further three assets in the Square Mile are readied for sale for a combined £1.2bn, CoStar News can reveal.
While no agents have yet been instructed to handle the sale, it is thought that JP Morgan is looking to sell the leasehold interest in the asset at 1-10 Bishops Square, E1, for a 4% net initial yield, or a capital value of around £1,000 per sq ft, booking the asset manager a near £300m profit in less than five years.
The news comes as market sources suggest there could be around £4bn of investment stock delivered to the central London market between now and the end of the year, chased by £40bn of equity.
The 823,439 sq ft, 12-floor campus has only 14,055 sq ft of vacancy, available at an average rent of £55 per sq ft, and produces c.£38m in annualised rent.
Bishops Square is majority let to international law firm Allen & Overy which occupies 477,267 sq ft in the property on a lease with a break in 2027 and expiry in 2030. Other tenants in the building include Newedge, occupying 60,000 sq ft, Deutsche Bank in 57,887 sq ft and MSCI Barra in 28,296 sq ft.
In December 2010, Hammerson and Oman Investment Fund, the Omani government investment arm, sold Bishops Square Holdings, the 25:75 joint venture that owned the long leasehold interest in the Bishops Square office development, E1. The JV company was bought by two funds managed by JP Morgan Asset Management, which paid £557m. Net passing rents at that time were £35m.
Also in the City, Malaysian pension fund Employees Provident Fund is preparing to sell law firm Freshfield's London headquarters at 65 Fleet Street, EC4, for £170m, through Cushman & Wakefield. The price reflects a net initial yield of 5% and will deliver EPF an uplift on the £148m, or £643.48 per sq ft, it paid for the 230,000 sq ft building, also in December 2010. The purchase price reflected a yield of 5.75%. Freshfields in the sole occupier in the building on the entire 219,996 sq ft of occice space.
Separately, Land Securities is to begin the process of selling the 154,000 sq ft Holborn Gate, WC1, in Midtown, for around £150m once it has completed a programme of refurbishment work and finished letting up the asset. While no instruction has yet been given, GM Real Estate is expected to handle the sale. The freehold block produces an annual rent of around £3m with 138,000 sq ft of office space and 9,000 sq ft of retail.
LandSec bought the building for £85.48m in July 2005, reflecting an initial yield of 6.2% and a capital value per sq ft of £547.10.
Lastly, Peter Beckwith’s PMB Holdings and Ares Management has instructed CBRE and Ingleby Trice to sellGartmore House at 8 Fenchurch Place, EC3, for close to £90m, reflecting a 4.75% yield, or a capital value of c.£900 per sq ft. The 123,396 sq ft office building was bought for £32.7m in February 2010, reflecting an 11% yield, and is majority let to County Bank, which occupies 92,490 sq ft. Notwithstanding the wider uplift in City pricing since 2010, the asking price is partly a reflection of the capital expediture on the building post-acquisition. The 1987-built property sits above Fenchurch Street station.