Derwent sells Grosvenor Place
Derwent London has exchanged contracts to sell its 50% interest in 1-5 Grosvenor Place SW1 to The Hongkong & Shanghai Hotels, for £132.5 million before costs. As at 31 December 2012 the Group’s interest was valued at £78 million. The transaction reflects a 70% premium to that valuation.
The existing properties comprise mainly offices and extend to 168,000 sq ft (15,600m2), net, at Hyde Park Corner, Belgravia.
In 2012, Derwent London and Grosvenor, the freeholder of 1-5 Grosvenor Place, restructured their interests and established a joint venture. Under that agreement Derwent London’s leases, which were due to expire in 2063 and 2084, were restructured onto a 150-year term. Simultaneously the Group sold 50% of its ownership to Grosvenor for £67.3 million.
On completion of the transaction with Peninsula Hotels, Derwent London will have received proceeds of almost £200 million from 1-5 Grosvenor Place since the start of 2012.
It is intended that, following the disposal of Derwent London’s interest, Peninsula Hotels and Grosvenor will work together towards redevelopment of the site as an hotel and residential scheme.
Derwent London has a committed capital expenditure programme of around £400 million and is currently on site at projects totalling over 400,000 sq ft (37,200m2). Over the next 12 months Derwent London will start construction of a further 345,500 sq ft (32,050m2) with our White Collar Factory offices at Old Street EC1, retail space at 18-30 Tottenham Court Road W1 complementing our current office scheme at 1-2 Stephen Street W1 (together 127,000 sq ft/ 11,800m2) and a residential development at 73 Charlotte Street W1. The regeneration of 385,000 sq ft (35,800m2) at 80 Charlotte Street W1 will now commence in early 2015.
After agreeing the heads of terms for the sale John Burns, Chief Executive Officer at Derwent London, commented:
“These heads of terms move Derwent London towards securing most of our anticipated gain from the redevelopment of 1-5 Grosvenor Place. The Group will receive the proceeds five to six years ahead of the expected completion date for the scheme and continues to invest in other opportunities, principally its extensive development pipeline which amounts to over 2.5 million sq ft of space that could potentially be delivered before 2020.”
Source : Company