I used 10 Fleet Place in London for my first student investment appraisal project at UCL. It was only in 2013 but it seems like ages ago. At the time, it was a ‘live’ transaction with the students working out its worth as it was being marketed. It actually sold for £114.5 million to AREA Property Partners at a reported Net Initial Yield of 6.18%. In 2013, it looked like an ageing office that had some strong tenants and some good lease structures. It was also particularly well-placed in terms of Crossrail. However, other assets were selling for substantially lower yields at the time.
Potential to add value was mentioned in the sales particulars when it was being marketed in 2013. I’m not sure what AREA have done with the property in the meantime. Refurbishment? Lease re-gearing? New lettings? Maybe they haven’t done any ‘re-positioning’ and the market has been particularly benign. However, 10 Fleet Place has just sold for a reported £153.5 million to a consortium of private investors from Hong Kong. This looks like an NIY of around 4.5%. That’s a major yield shift increasing the capital value by 34% or £39 million in a bit more than two years.