Barings, one of the world’s largest diversified real estate investment managers, on behalf of Barings Real Estate European Value-Add Fund II (BREEVA II), has acquired an 82,413 sq ft office asset in the City of London for £70.65 million from global real estate manager, DWS. The deal reflects an initial yield of 4.8% and a capital value of £857 per sq ft.
25 Moorgate comprises c. 75,000 sq ft of office space, with c. 7,800 sq ft of retail and F&B space across the ground floor and basement, and is currently fully let to two tenants. It is well located in the centre of the City of London, the UK’s leading professional and financial services business district, and is well connected to local and national transport links via London Underground and National Rail stations, including Bank, Liverpool Street and Moorgate, and is set to benefit further from the opening of the Elizabeth Line, which will provide easy access to Heathrow Airport as well as commuter towns such as Reading in the west and Shenfield in the east.
Acquired as part of a value-add strategy, Barings intends to refurbish the entire building to provide a best-in-class, Grade A office space with leading ESG credentials and wellbeing amenities, including active commuter facilities and a green rooftop garden. Improvements will also be made to optimise the energy efficiency of the building.
BREEVA II is Barings’ second pan-European value-add real estate fund. It recently reached its final close having reached its hard cap of €850 million after receiving €1 billion of client demand, significantly surpassing the target of €750 million. It is targeting value-add opportunities across Europe, with a focus on repositioning and build-to-core opportunities in the logistics, alternatives – living and office sectors.
Darren Hutchinson, Managing Director and Head of UK Real Estate Transactions at Barings, said: “This was an attractive opportunity to acquire a well-located office asset that offers both income in the short term alongside significant reversionary potential following a comprehensive refurbishment programme. Offices in central London still have immense appeal to occupiers that are keen to attract and retain talent by providing best-in-class space that can facilitate hybrid working not just through the quality of its facilities, but also its proximity to both transport connections and a range of local amenities that will encourage staff to return to the office. Following its refurbishment, 25 Moorgate will be well-positioned to take advantage of the structural trends underpinning office take up and will deliver significantly more value for our initial investment.”
Gunther Deutsch, Head of Europe Real Estate Transactions at Barings, said: “Following the recent acquisition of a soon to-be-developed office asset on the Southbank in London and an office refurbishment in Milan, we are keenly looking for other office opportunities across our jurisdictions, including Sweden, the Netherlands, Germany, Italy, France and Spain. Aside from well-located existing assets, we are eager to explore joint ventures with developers to build state-of-the-art ESG/net zero office space across Europe as we are strong believers in the attractiveness of these qualities. As such, 25 Moorgate is a perfect addition to the UK portfolio that we have acquired so far and we look forward to announcing further transactions in our preferred sectors of logistics, alternatives – living, and office in the near term.”
Markus Wickentraeger, Head of Real Estate Portfolio Management, Germany at DWS said: “This sale is the conclusion of a strategic investment in the London office market in 2009, and we’re very proud of the outcome. Throughout the term of our ownership, DWS executed a very successful core strategy over a 13 year period delivering high single digit performance on this asset to our clients. The fund capitalized on an attractive entry yield, an uninterrupted cash flow and a strong sentiment in today’s investment market for value-add opportunities in London.”
“We will continue to seek London office opportunities in emerging locations and with value growth potential for our varying investment strategies.”
