AXA Real Estate Investment Managers has completed, on behalf of clients, the acquisition of 18-20 St Andrews Street, London from a fund managed by CBRE GI for a total consideration of £32 million (€44.7 million)(2), which AXA Real Estate will imminently refurbish as part of its value add and development strategies, with Morgan Capital Partners acting as development manager.
The Midtown asset is currently 100% vacant and stripped out and AXA Real Estate will now undertake a comprehensive refurbishment including the addition of a ninth floor on top of the building, to increase the total floor area of around 54,000 sq ft (5016.8 sqm) to capitalise on the demand for modern office space in this popular midtown location. The refurbishment will also comprise significant works to the external elevations, reconfiguration of the office floors and reception area, the creation of cycle storage and the installation of three new lifts. Works are due to start in third quarter 2015 with completion estimated at fourth quarter 2016.
The 1980's mid-town office asset is currently spread across eight floors, including a basement, ground and mezzanine levels. Located south of Holborn and north of Fleet Street, the property is adjacent to the New Street Square legal district. The property benefits from extensive public transport links, including tubes, overground and bus routes, in close proximity, which will further improve with the opening of the new Farringdon Crossrail station in 2018.
AXA Real Estate identified this investment proposition at an opportune time in London's market cycle as a diverse range of central London businesses are migrating to the Midtown area in search of high quality office accommodation and drawn by the area's diverse occupier base and its proximity to Crossrail in 2018. The current landscape sees demand significantly exceeding supply in the area due to both a restricted development pipeline and record low vacancies, which AXA Real Estate expects to capitalise on for the benefit of its clients.
With a total of c.£6 billion(2) (€8 billion) of development projects currently under management in eight European countries, £1 billion (c.€1.4 billion)(2) of which are in the UK, AXA Real Estate continues to excel at sourcing, renovating and developing assets, with a particularly strong track record in prime central London, supporting the ongoing transformation of the City's leasing dynamic. Through the redevelopment of flagship assets such as Sixty London, 6 Bevis Marks and The Department in Victoria, AXA Real Estate has been able to attract world class tenants to landmark properties creating value for its clients.
This transaction is also directly in line with AXA Real Estate's value-add investment strategy, which is focused on office, retail, logistics, hotel and alternative real estate assets in Europe's key real estate markets. It builds upon AXA Real Estate's expertise in sourcing and executing value-added transactions, and its ability to create value through both active asset management and timely acquisitions in markets offering significant pricing dislocation.
Colliers International advised AXA Real Estate and Morgan Capital Partners. Cushman & Wakefield advised CBRE GI.
Martin Perrott, Senior Transactions Manager at AXA Real Estate, commented: "St Andrews House presents an attractive opportunity within a prime location in London's Midtown to redevelop a core asset, adding value through both a thorough refurbishment and an extension of the building's current floor plan. Once completed, the asset will provide much needed Grade A office accommodation designed not only to appeal to traditional City occupiers, who may be seeking improved premises for their businesses, media tech companies, many of which have recently taken space in the area. The area's popularity is expected to receive a further boost from the opening of the nearby Crossrail in 2018."
Source: AXA Real Estate