Hammerson acquires leasehold on City offices

REIT pays £100m for 999 year lease on 99 Bishopsgate

Article posted: 12 Jul 2011

Hammerson has acquired a 999-year leasehold (virtual freehold) interest in office space in the City of London at 99 Bishopsgate, from PRUPIM acting on behalf of the Prudential Assurance Company Ltd for £100m, including costs. 99 Bishopsgate is a 26-storey tower providing 339,000 sq ft of office accommodation in the centre of the Square Mile. It is occupied by a number of financial and professional services companies including: Deutsche Bank, Latham & Watkins, Korea Development Bank and Charles River Associates International.

Hammerson has owned a long leasehold interest in the property, which expires in 2100, since its reconstruction in 1994. The rent payable to Prudential was £4.2m per annum. Net of headrent, Hammerson's passing rents at 31 December 2010 were £13.6 million, and at that time Hammerson’s interest was valued at £126m.

Deutsche Bank is expected to vacate the majority of its space later this year. Hammerson intends subsequently to refurbish approximately 13,500 m2 of the office space ready for occupation in 2012, during a period of expected undersupply.

David Atkins, Chief Executive said: "This freehold acquisition further increases our exposure to the City of London office market whilst improving asset liquidity and expected returns. 99 Bishopsgate is an excellent building which has consistently achieved peak City rents. We have an exciting business plan for the property and ownership of the merged interest will ensure that we maximise returns to shareholders from this investment."

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Posted by Jo