Mayfair Capital, a member of Swiss Life Asset Managers, has acquired the Bonhill Building in central London for £112.5m. This marks the specialist UK real estate investment manager’s largest acquisition to date.
Located in the heart of the vibrant submarket of Shoreditch, the property shows a net initial yield of approximately 5% and displays attractive long-term rental growth opportunity.
The Bonhill Building benefits from proximity to the traditional City core, as well as the Old Street ‘Silicon Roundabout’. It is also a short distance from the new Elizabeth Line stations at Moorgate and Liverpool Street. Moreover, the Bonhill Building is well positioned to benefit from growing interest in the tech belt surrounding the City’s northern fringe.
Despite concerns around the London real estate market in relation to Brexit, London possesses strong thematic characteristics – including connectivity, networks and demographics – which bodes well for long-term occupational demand. Supply of good quality space is set to remain constrained, and likely to further support rental growth.
The building provides modern office accommodation across the basement, ground and six upper floors, totalling 113,000 sq ft. The 1960s office space has been through a comprehensive refurbishment programme, which was completed in 2017. Multi-let to seven tenants, with a weighted average unexpired lease term of approximately 7.5 years and average office rent of £54psf, the property boasts attractive rental characteristics.
Giles King, fund manager at Mayfair Capital Investment Management, says: “The Bonhill Building meets a number of our thematic investing criteria – tech connectivity, transport infrastructure, clustering of tech businesses and wellness. Along with an attractive yield of 5%, we see potential for further growth in the office rents.
“The acquisition case was strengthened by our expectation London will remain a popular destination for talent and occupiers regardless of the Brexit outcome. Much of the global city’s attraction is tied to factors independent of the UK’s EU membership – location, time zone, language, workforce, infrastructure and culture. So far London has proved very resilient, with strong job creation and new commitments from international corporates – such as Google.”
Colliers advised the vendor, Legal and General, and Knight Frank advised MCIM.