Prompted by rising rents in Britain’s biggest financial district, Deka Immobilien has paid almost £416m — 500 million Euros — for a City of London office building.
Deka, buying on behalf of its open-ended real estate fund Deka-ImmobilienEuropa, has acquired the prestige St. Botolph Building in the City’s insurance district.
Completed in 2010 for the investment and development company Minerva, the 13-storey office block has an overall rentable area of some 558,000 sq ft which is currently fully-let. More than half of this space is taken by insurance group Jardine Lloyd Thompson Group Plc. Other St Botolph occupants include the law firm Clyde & Co and insurance broker Lockton Associates.
The design brief for the St Botolph Building called for a landmark building of significant architectural merit on a site that forms a key gateway to the City of London. The upper 11 floors house state-of-the-art offices, while the first and second levels provide more flexible office space. The lower ground floors provide retail and multi-functional space.
Rumours of a European fund purchase of the site first surfaced in the summer when it was reported Delancey and Ares Management, which last year jointly purchased Minerva, was nearing the first significant off-market sale from the acquisition.
The St Botolph’s buy out continues Deka-Immobilien Europa’s strategy to increase its portfolio allocation in London’s particularly large and liquid commercial real estate market and to benefit from its sustainable growth potential.
Operating mainly in Europe, Asia and the United States, Deka Immobilien Investment manages property assets for private investors. The group offers open-ended property funds, along with several tailor-made funds for institutional investors, such as church organisations, pension funds, foundations and insurance companies. Through its three mutual funds — Deka-ImmobilienFonds, Deka-ImmobilienEuropa and Deka-ImmobilienGlobal — the group manages a number of tailored property funds for its institutional investors.
Deka is Germany’s biggest manager of property mutual funds, proving this year’s continued attraction of the British capital as a safe haven for international investors.
“London activity remains strong,” said Bill Tyser, head of City investment at Cushman & Wakefield. “Much of this activity is limited to a small number of substantial transactions and whilst there are concerns over the availability of stock to meet this intensified demand, there are also signs of profit-taking emerging from investors who acquire property at the beginning of this ‘crisis cycle’.”
Demand for central London office space seems to be keeping pace with the recovering economy. September’s average lease of £58.50 per sq ft is expected to rise to at least £60 by the end of the year with some agents predicting a high of £70 per sq ft by mid-2014.
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