Property giant Derwent London has announced the acquisition of five buildings around Bloomsbury and Marylebone as demand for new office space starts to rebound.
Derwent London exchanged contracts for two properties totalling 182,100 sq ft located in the so-called knowledge quarter around University College London for £214.6m.
The freehold office building at 250 Euston Road is let to University College London Hospital on a lease that expires in 2039 with rent currently at £4.7m per year.
The nearby freehold office and retail building on 171-174 Tottenham Court Road is also being acquired. It is located opposite Derwent London’s Network Building, totals 16,200 sq ft and produces an income of £0.6m.
Both acquisitions form a strategic holding in the area, with longer-term development potential in an area with a high concentration of academic, medical and scientific organisations.
Derwent London also announced a joint venture with Lazari Investments in Baker Street, acquiring three properties totalling 122,200 sq ft owned by the investment group for £64.4m.
The buildings on 38-52, 54-60 and 66 Baker Street sit opposite Derwent London’s current mix-use project on 19-35 Baker Street. Their passing rent is £5.2m per year, with leasehold interests ranging from 38 to 46 years.
With a fourth building owned by The Portman Estate, these buildings form a one-acre island which the company says is capable of significant redevelopment. Its intention is to apply for planning permission to build a major 240,000 sq ft development, which could begin in 2024.
Paul Williams, chief executive of Derwent London, said: “These are exciting acquisitions in a strong market. We are further investing in central London’s Knowledge Quarter with potential Life Science opportunities and extending our development pipeline.”
The company reported a 1.4 per cent increase in the value of its investment portfolio in the first half of the year, to £5.4bn as per the latest interim results. Interim dividend also increased by 4.5 per cent to 23p per share. The real estate investment trust owns 81 buildings in a commercial real estate portfolio mostly in central London.
“We expect to retain more of our larger modern developments where we see good long-term demand,” said the property firm.
The company also announced its purchase of the South West Wing of Bush House for £13.5m last week.