CLS Holdings has exchanged contracts to acquire 9 Prescot Street for £53.85 million excluding costs.
The freehold building is 100% let to four tenants with a weighted average unexpired lease term of 2 years to breaks.
It is located on the fringe of the City in the Aldgate area, which continues to undergo significant regeneration, including the new Chinese Embassy at the former Royal Mint site, and is close to multiple key transport links including Fenchurch Street, Tower Hill, Aldgate East and Shadwell stations.
The property is being acquired at a capital value of £555 per sq. ft. and with the net initial yield of 4.5%, there is a substantial reversionary rental upside to deliver an estimated yield approaching 8% through active asset management. Current contracted rental income of £2.56 million equates to £26.41 per sq ft and CLS intends to undertake a substantial refurbishment to deliver high-quality space in an improving area with limited supply. CLS intends to finance the acquisition through existing resources and bank financing.
Fredrik Widlund, Chief Executive Officer of CLS, said:
“This acquisition is a clear demonstration of our ability to undertake transactions on an opportunistic basis where we can utilise our asset management expertise to deliver value over the long term in line with our strategy. The property’s excellent location and attractive potential makes this an exciting acquisition for CLS.”
David Silverman, Investment Director at Derwent London, commented: "9 Prescot Street has produced strong returns since acquisition and the disposal enables us to recycle capital into our larger on-site developments. Through the establishment of our successful joint venture with LaSalle in 2015, we acquired a long leasehold interest in 20 Farringdon Road EC1, a major holding adjacent to the Farringdon Elizabeth line station.”
Julian Agnew, CIO at LaSalle Investment Management, added:
"We are pleased with the success of 9 Prescot Street which has delivered strong returns for our client as a result of a successful collaboration with our joint venture partner, Derwent London.”