savills central london investment bulletin january...

SAVILLS CENTRAL LONDON INVESTMENT BULLETIN JANUARY 2017

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SAVILLS CENTRAL LONDON INVESTMENT BULLETIN – JANUARY 2017

CENTRAL LONDON INVESTMENT - INTRODUCTION

Savills Central London Investment team was the leading advisor on Central London transactions in 2016, with a 27% market share. In particular, we were the lead advisor for acquisition work across London, transacting on almost double that of our nearest competitor, and had a 41% market share of all deals over £150m. Over the past five years we have deliberately gone out to improve our overall market share and position in the investment market, and it is pleasing to see the fruits of that effort.

Savills has 34 qualified professionals in the Central London Investment division. This is an experienced team, some of whom have worked in the market for over 20 years. We have a strong client following, based around our hard work, professionalism and personalities. If you haven’t had the chance of using us recently I would encourage you to do so and, in the first instance, please call me at any time to discuss what we can do for you.

MARKET CONTEXT

In January 2016 we knew that a more challenging market lay ahead, both for investors and occupiers. We had enjoyed a four year run of strong activity and the cyclical slow down was inevitable. In addition to this, there was clearly significant uncertainty regarding the imminent EU Referendum.

Following the decision to leave the EU, the market went into a state of panic and several redemptions from the open-ended funds led to some forced sales that seemed to suggest the market was going to take a 10-15% hit in values. Turnover in the third Quarter fell substantially and many investors simply froze in the headlights of uncertainty; this was not helped by the mixed messaging coming out of the Government and the change in leadership.

OUR 2016 MARKET SHARE EXCEEDED

23% IN EACH QUARTER.

IN 2016 WE ADVISED ON

40% OF £100M+ DEALS AND

41% OF £150M+ DEALS

WE ADVISED ON

1 IN EVERY 4 TRANSACTIONS IN Q4

2016 Q1 Q2 Q3 Q4 TOTAL 2015 (% change)

CITY Vol. (M)

£1,689 £2,586 £1,107 £2,693 £8,075 £10,934(-26.14%)

CITY No. Deals

37 45 30 45 157 159 (- 1.26%)

WEST END Vol. (M)

£2,374 £1,324 £1,860 £2,307 7,865 £8,670 (-9.3%)

WEST END No. Deals

40 46 36 48 170 199(-14.6%)

CL Vol. (M)

£4,063 £3,910 £2,967 £5,000 £15,939 £19,604(-18.7%)

CL No. Deals

77 91 66 93 327 358 (-8.7%)


With the pound falling as a consequence of the decision to leave Europe, London demonstrated its resilience as an international market place for investment capital. By September there were clear signs, coming from our Asian offices in particular, that investors were turning their attention to the Capital. The number of Cantonese and Mandarin speaking investors coming through our doors at Margaret Street and Finsbury Circus increased dramatically, having been referred to us by our offices in Hong Kong, Beijing and Shanghai in particular. The final Quarter of 2016 rallied off the back of this increased activity from overseas and I am glad to say that Savills was at the forefront of this activity, handling 38% (by volume) of all Asian and Middle Eastern deals during that period.

Graph 1 shows that by the end of the year, we had the largest share of transactional activity, based on deals completed / unconditionally exchanged, while Graph 2 shows that we were the most active agent in 2016 in terms of acquisitions.

2017 promises to be as uncertain as 2016, in many respects, and will be driven by events both domestic and international. However, having spent many days last year travelling the globe meeting investors, it is clear that London is still regarded as the pre-eminent commercial investment market in the world and, as we have seen in previous years at times of uncertainty, our market, and the way in which we do business, is regarded as the gold standard for investors looking for a safe haven for their capital. As institutions continue to look to property as an alternative home for their capital, compared with bonds and equities in particular, we expect the prime end of London to continue to demonstrate resilience and stability.

On a more cautious note, as the overall economic and property cycle slows, the spotlight will be on the occupational market and rental growth, which will inevitably begin to soften in some sub-markets. Investors need to be more selective than ever in order to avoid painful financial mistakes and I hope that Savills will continue to be at the forefront of advice on this.

In the next few pages we set out details of the Central London deals on which we have advised our clients. We hope to have continued success in 2017 and look forward to working with many of you over the next 12 months.

STEPHEN DOWN

Head of Central London Investment

Graph 1: Central London Transaction Volume (By Top 6 Agents)

Graph 2: Central London Acquisition Volume (By Top 6 Agents)

(M)(M)

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WEST END INVESTMENT TEAM

ADVISED ON OVER

£2.364BN WORTH OF TRANSACTIONS

IN 2016 (30% MARKET SHARE)

HAD A MARKET SHARE OF

43%

IN Q4 2016

OVER THE PAST THREE YEARS HAVE ADVISED ON

34 DEALS IN EXCESS OF

£50M

CASE STUDY - ACQUISITION (DEC-16)

1 & 2 FITZROY PLACE, W1CV: £217.1M

Vendor: Kaupthing (50% stake)

Purchaser: Ashby Capital

Context: Savills advised Ashby Capital in its acquisition of Kaupthing’s 50% stake in this recently completed freehold mixed-use development.

Savillls drew on its unrivalled ability to provide multi-faceted advice, which was paramount in this case given that the scheme comprises 251,214 sq ft of office, retail, healthcare and educational uses, with a further 289 residential units.

The majority of income is derived from the offices, with 1 Fitzroy Place being the UK headquarters of cosmetics firm Estée Lauder and 2 Fitzroy Place being multi-let to four tenants.

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SALE (JUL-16)

23 KING STREET, SW1

CV: £116.0M (£2,426 psf)

NIY: 4.00%

Vendor: Standard Life

Purchaser: Private Asian Investor

SALE (SEP-16)

65 CURZON STREET, W1

CV: Confidential

NIY: N/A

Vendor: DTZ Investors

Purchaser: Confidential (Overseas)

SALE (JUN-16)

20 KING STREET, SW1

CV: £50.2M (£1,704 psf)

NIY: 3.50%


Purchaser: Arbuthnot Latham

SALE (APR-16)

37-41 MORTIMER STREET, W1

CV: £26.95M (£1,132 psf)

NIY: N/A

Vendor: Great Portland Estates

Purchaser: Private Investor

ACQUISITION (JAN-16)

33 MARGARET STREET, W1

CV: £216.3M (£2,085 psf)

NIY: 3.30%

Vendor: Great Portland Estates

Purchaser: Deka

ACQUISITION (MAY-16)

THE ASTICUS BUILDING, SW1

CV: c.£80M (£1,339 psf)

NIY: c.4.00%

Vendor: Aberdeen Asset Management

Purchaser: AXA IM

ACQUISITION (APR-16)

12 GOLDEN SQUARE, W1

CV: £46.8M (£1,721 psf)

NIY: Confidential

Vendor: UBS (CLOVA)

Purchaser: Confidential

SALE (DEC-16)

1 PORTAL WAY, W3

CV: Confidential

NIY: Confidential

Vendor: Crosstree Real Estate Partners

Purchaser: Confidential Investor


SALE (JAN-16)

KINGS CROSS CENTRAL, N1C

CV: Confidential

NIY: N/A

Vendor: LCR & DHL

Purchaser: Australian Super

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ACQUISITION (DEC-16)

10 PICCADILLY, W1

CV: Confidential

NIY: Confidential


Purchaser: The Regent Street Partnership


11-12 CHARLES II STREET, SW1

CV: Confidential

NIY:Confidential


Purchaser: The Crown Estate


25 GREAT PULTNEY STREET, W1

CV: £54.4M (£1,646 psf)

NIY: 3.96%

Vendor: BMO

Purchaser: Orchard Street

CASE STUDY - ACQUISITION (NOV-16)

47-50 NEW BOND STREET, W1CV: £198M


Purchaser: Oxford Properties / Richemont (RLG)

Context: Savills advised Oxford Properties and Richemont in their joint acquisition of this prime, Grade II listed mixed-use corner building, augmenting their established presence on New

Bond Street.

The property comprises 48,168 sq ft of retail / office accommodation arranged over lower ground, ground and five upper floors. The retail units are let to luxury retailers Mulberry and Pinet whilst the office floors are let separately to tenants including Ralph Lauren.

Savills sourced the opportunity for the client and carried out the required property due diligence.


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SALE (DEC-16)

ELYSIUM GATE, NEW KINGS ROAD, SW6

CV: £15.95M (£621 psf)

NIY:4.20%

Vendor: GMS Estates


SALE (DEC-16)

HOLBORN LINKS ESTATE, WC1

CV: c.£300M

NIY: Confidential

Vendor: Triangle Group

Purchaser: Citwax Investments

SALE (NOV-16)

197 KENSINGTON HIGH STREET, W8

CV: £7M (£1,782 psf)

NIY: 3.35%

Vendor: Private UK

Purchaser: Oxygen Asset Management

SALE (OCT-16)

13/14 CURZON STREET, W1

CV: £39.25M (£3,148 psf)

NIY: 3.25%


Purchaser: Private UK

SALE (JUN-16)

191 OLD MARYLEBONE ROAD, NW1

CV: £31.25M (£839 psf)

NIY: N/A

Vendor: Aviva Investors

Purchaser: Whitbread

SALE (AUG-16)

WATERGATE HOUSE, WC2

CV: £19.9M (£1,779 psf)

NIY: 3.77%


Purchaser: Private Middle Eastern Investor


ACTED IN 1 OF 4

WEST END DEALS THAT TOOK PLACE AFTER THE

EU REFERENDUM.

ACTED ON BEHALF OF

33

SEPARATE CLIENTS ACROSS

38TRANSACTIONS

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SALE (JUL-16)

THANET HOUSE, WC2

CV: £18.5M (£579 psf)

NIY: N/A

Vendor: Private Asian Investor

Purchaser: Lenta Business Centres

SALE (JUN-16)

WILTON PLAZA, SW1

CV: £6.13M (£872 psf)

NIY: 4.64%

Vendor: Land Securities

Purchaser: Habor Group International

ACQUISITION (AUG-16)

THE SHIP, 10 THAMES BANK, SW14

CV: £4.53M (£804 psf)

NIY: 4.12%

Vendor: TH Real Estate

Purchaser: Private UK Investor


3A KENSINGTON HIGH ST, W8

CV: £8.22M (£1,838 psf)

NIY: 3.49%


Purchaser: Private European Investor

SALE (AUG-16)

WELLINGTON HOUSE, SW1

CV: £3.43M (£N/A psf)

NIY: 4.02%

Vendor: Land Securities

Purchaser: Nationwide Pension Fund


39 DARTMOUTH, SW1

CV: £5.3M (£1,574 psf)

NIY: 3.50%


Purchaser: Private European Investor


ACQUISITION (MAY-16) ACQUISITION (FEB-16) SALE (SEP-16)

31 OLD BOND STREET, SW1

CV: £36M (£12,734 psf)NIY: 2.59%Vendor: LevievPurchaser: Hong Kong Investor

33 GROSVENOR STREET, SW1

CV: Confidential

NIY: N/A

Vendor: The Grosvenor Estate

Purchaser: Floreat Group

112-116 NEW OXFORD STREET, WC1

CV: Confidential

NIY: N/A

Vendor: Private Investor

Purchaser: Private Investor

SALE (DEC-16)

8-14 MEARD STREET & 8 RICHMOND MEWS, W1

CV: Confidential

NIY: Confidential

Vendor: Private Investor


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CITY INVESTMENT TEAM


MOOR PLACE, 1 FORE STREET, EC2CV: £271.0M (£1,144 psf)

NIY: 4.86%

Vendor: Brookfield

Purchaser: Kingboard Chemical Holdings

Context: This sale highlighted the strong appetite for high quality commercial real estate in London, despite risks surrounding the UK’s decision to leave the European Union.

The purchase provided our client with the opportunity to acquire a landmark City of London asset on top of the proposed Moorgate/Liverpool Street Crossrail Station and, as such, in an area of London that is witnessing a significant level of investment.

The longevity of the income provided by the leasing profile and the fixed annual rental uplifts allowed our client to capitalise on an attractive yield profile, further enhanced by the currency advantage they enjoyed at the time of purchase.


ADVISED ON OVER

£2.05 BN WORTH OF TRANSACTIONS

OVER 2016 (25% OF MARKET SHARE)

30

SEPARATE CLIENTS ACROSS

32TRANSACTIONS

IN 2016 ADVISED ON OVER

30%OF ALL TRANSACTIONS

OVER £100M

SALE (SEP-16)

33 GRACECHURCH STREET, EC3

CV: £75.10M (£701 psf)

NIY: 4.96%

Vendor: Savills IM


SALE (SEP-16)

41 TOWER HILL, EC3

CV: £84.50M (£497 psf)

NIY: 6.65%

Vendor: Societe Generale

Purchaser: China Minsheng

SALE (JAN-16)

50 FINSBURY SQUARE, EC2

CV: £119.00M (£942 psf)

NIY: 5.27%

Vendor: GPE

Purchaser: Deka

ACQUISITION (JUL-16)

TRAVELODGE, 1 HARLOW PLACE, E1

CV: £42.00M (£923 psf)

NIY: 4.61%

Vendor: Goldman Sachs

Purchaser: YT Realty

SALE (MAR-16)

124 THEOBALDS ROAD, WC1

CV: £65.75M (£811 psf)

NIY: 4.04%

Vendor: DTZIM

Purchaser: Private

ACQUISITION (MAR-16)

8 FENCHURCH PLACE, EC3

CV: £80.00M (£810 psf)

NIY: 5.41%

Vendor: PMB Holdings



17 COLUMBUS COURTYARD, E14

CV: £131.00M (£670 psf)

NIY: 4.60%

Vendor: Vico Capital

Purchaser: HNA


THE TELEPHONE EXCHANGE, HIGH HOLBORN, WC1

CV: £42.70M (£630 psf)

NIY: 3.35%

Vendor: Telereal

Purchaser: Columbia Threadneedle

SALE (MAR-16)

EMPEROR HOUSE, VINE STREET, EC3

CV: Q. £40.00M (£415 psf)

NIY: N/A

Vendor: London & Regional



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ACQUISITION (OCT -16)

1 CAREY LANE, EC2

CV: £23M (£871 psf)

NIY: 4.83%

Vendor: TIAA Henderson

Purchaser: TRIUVA


76 CANNON STREET, EC4

CV: £7.60M (£818 psf)

NIY: 1.02%

Vendor: Private

Purchaser: Private ME

SALE (MAR-16)

71 QUEEN VICTORIA STREET, EC4

CV: c.£220M (c.£1,100 psf)

NIY: c.4.40%

Vendor: Private Israeli Investor

Purchaser: Pacific Eagle



REGIS HOUSE, 45 KING WILLIAM STREET, EC4CV: £105M (£981 psf)

NIY: 4.41%


Purchaser: Private Middle Eastern

Context: Savills advised the purchaser on the acquisition of this prime City of London freehold asset, which occupies a prominent island site 200 metres from the Bank of England.

The acquisition highlighted Savills unrivalled client relationships as the team were able to unlock the property through an off market transaction. The property was previously owned by Aberdeen Asset Management who held the building in the Scottish Widows Pooled Property ACS Fund, a legacy fund from its acquisition of Scottish Widows Investment Partnership from Lloyds Banking Group in 2013.

The property provides a 107,000 sq ft building, multi let to 5 office tenants and 5 retail tenants with an attractive WAULT of 7.1 years and a low average passing rent of £46 per sq ft overall.

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ACQUISITION (NOV -16)

187 FLEET STREET, EC4

CV: £5.40M (£855 psf)

NIY: 3.42%

Vendor: Private Asian

Purchaser: Private European

ACQUISITION (DEC -16)

44 EAGLE STREET, WC1

CV: £11.3M (£946 psf)

NIY: N/A

Vendor: The Folio Society Limited

Purchaser: Owner Occupier


62 CORNHILL, EC3

CV: £32.00M (£978 psf)

NIY: 4.48%

Vendor: TIAA Henderson

Purchaser: TRIUVA

SALE (DEC -16)

65-70 WHITE LION STREET, N1

CV: c. £13.0M

NIY: N/A

Vendor: Noble House

Purchaser: LBS


NEW COBHAM HOUSE, BLACKFRIARS ROAD, EC4

CV: c. £25.00M (£810 psf)

NIY: 4.50%

Vendor: GLL



63 QUEEN VICTORIA STREET. EC4

CV: £33.50M (£748 psf)

NIY: 4.68%


Purchaser: Private Asian Investor


HAD A MARKET SHARE OF

25% IN Q4 2016

ADVISED ON

c. £8.0 BNWORTH OF TRANSACTIONS

SINCE 2014

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SHOREDITCH VILLAGE, EC2

CV: £20.00M (£296 psf)NIY: N/AVendor: Private Purchaser: Brockton Capital

ACQUISITION (JAN-16)

90-94 FLEET STREET, EC4

CV: £13.60M (£978 psf)

NIY: 3.34%

Vendor: Deerbrook


SALE (JUN-16)

2 WAKLEY STREET, EC1

CV: £5.18M (£682 psf)

NIY: 2.98%

Vendor: Private UK


ACQUISITION (SEP-16)

1 NORTON FOLGATE, E1

CV: £17.00M (£981 psf)

NIY: 4.94%


Purchaser: Private


BURFORD ROAD BUSINESS CENTRE, E15

CV: c. £8.10M (£381 psf)

NIY: N/A

Vendor: Confidential

Purchaser: Private International

ACQUISITION (FEB-16)

39 CORNHILL, EC3

CV: £24.00M (£1,182 psf)

NIY: 2.90%

Vendor: Private ME

Purchaser: Private

ACQUISITION (JUN-16)

BRANDON HOUSE, 180 BOROUGH HIGH STREET, SE1

CV: £19.70M (£538 psf)NIY: N/AVendor: Crest NicholsonPurchaser: Brockton Capital


CHANDELIER BUILDINGS, NW1

CV: £13.19M (£285 psf)

NIY: 4.20%

Vendor: Blackrock/Workspace

Purchaser: Private UK Investor

SALE (JAN-16)

60 LOMBARD STREET, EC3

CV: £22.40M (£787 psf)

NIY: N/A

Vendor: Knight Frank Investors

Purchaser: Falcombe Group

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30 CROWN PLACE, EC2CV: £204M (£1,031 psf)

NIY: 4.44%

Vendor: Samsung SRA

Purchaser: BCDH

Context: This acquisition provided another example of the strong appetite for high quality City of London office buildings since the UK’s vote to leave the EU.

The acquisition provided our client with a landmark

City of London office building, let in its entirety to the undoubted covenant of Pinsent Masons LLP for a further 14.5 years term certain. The property is situated on the northern fringe of the City, adjacent to the Broadgate Estate and in close proximity to both Shoreditch and Liverpool Street Station (Crossrail services from 2018).

The property is let on four coterminous leases with staggered rent reviews, offering our client the opportunity to capitalise on future rent reviews in light of the low passing rent and the ongoing developments in the immediate vicinity.


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WEST END INVESTMENT

PAUL COCKBURN Director +44 (0) 20 7409 8788 [email protected]

SIMON EWART PERKS Director +44(0)20 7409 8031 [email protected]

JONATHAN O’REGAN Director +44(0)20 7409 8179 [email protected]

BARRY MANGAN Director +44(0)20 7409 5915 [email protected]

EDWARD NICHOLSON Director +44(0)20 7409 8004 [email protected]

STEPHEN DOWN Head of Central London and International Investment +44(0)20 7409 8001 [email protected]

CITY INVESTMENT

ROBERT BUCHELE Director +44(0)20 7409 8007 [email protected]

RICHARD BULLOCK Director +44(0)20 7409 8006 [email protected]

DAN HESKETH Director +44(0)20 7409 8008 [email protected]

FELIX RABENECK Director +44(0)20 7409 8918 [email protected]

JAMIE OLLEY Director +44(0)20 7578 7546 [email protected]

TOM REEVES Director +44(0)20 7578 7549 [email protected]

STRATEGIC INVESTMENT ADVISORY

JAMES GOLDSMITH Director +44(0)20 7409 9918 [email protected]

RUSSELL BANHAM Director +44(0)20 7409 8133 [email protected]

JOHN HEAVER Director +44(0)20 7409 8786 [email protected]

JOHN TREVOR Director +44(0)20 7409 8796 [email protected]

OLIVER BAMBER Director +44(0)20 7409 8849 [email protected]


mailto:[email protected]


















CROSS BORDER INVESTMENT

Our dedicated Cross Border Investment team works closely with our Central London Investment department, and has been at the forefront of activity with global investors.

» In 2016 they worked on £4.4bn of transactions and have in excess of £6bn worth of live projects that they are working on.

» Middle Eastern, Asian and North American investors accounted for 61.2% of acquisitions by volume in 2016.

» Savills is the No. 1 agent in Central London buying for Middle Eastern and Asian investors in transactions where they have taken advice.

» Since the EU Referendum the Cross Border Investment team has held 514 direct meetings with over 327 separate overseas investors.

GLOBAL TEAM

SIMON HOPE Head of Global Capital Markets +44 (0) 20 7409 8725 +44 (0) 7740 404 003 [email protected]

HASSAN FARRAN Director Middle East +971 (4) 4239933 +971 56 607 6263 [email protected]

ERIC ZHAO Associate Director +44(0)20 7299 3077 +44 (0) 7730 091 400 [email protected]

EMMA STEELE Associate +44(0)20 7409 8892 +44 (0) 7752 406 698 [email protected]

RASHEED HASSAN Head of Cross Border Investment +44(0)20 7409 8836 +44 (0) 7870 999 776 [email protected]

OLIVER WATT Director, Asia +44(0)20 7016 3789 +44 (0) 779 906 1456 [email protected]

DAVID CHANG Senior Manager +44 (0) 207 409 5957 +44 (0) 7972 000 276 [email protected]

PHILIP GARMON-JONES Manager, Hong Kong +852 2842 4252 +852 9635 9963 [email protected]

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RECENT TRANSACTION HIGHLIGHTS INCLUDE:


c. £220.0M

FIRST TIME BUYER

ALDGATE TOWER, E1

£346.0M

REGIS HOUSE, 45 KING WILLIAM STREET, EC4

£105.0M

23 KING STREET, SW1

£116.0M

FIRST TIME BUYER

50% STAKE IN FITZROY PLACE, W1

£217.1M

MOOR PLACE, 1 FORE STREET, EC2

£271.0M

41 TOWER HILL, EC3

£84.5M

FIRST TIME BUYER

30 CROWN PLACE, EC2

£204.0M


£33.50M

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savills central london investment bulletin january...

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