Brockton to offload £215m Government-let Victoria trophy

Brockton Capital is preparing to put its 33 Horseferry Road property in Victoria, SW1 up for sale for £215m, having agreed a new 17-year index linked lease to the Department for Transport, CoStar News can reveal. JLL has been appointed to sell the 180,600 sq ft block for an initial yield of 3.6%, reflecting a capital value of £1,190 per sq ft. The building is being sold with 17 years of UK Government income with annual uplifts linked to the Consumer Price Index, with a collar of 1% pa and cap of 4% pa. The capital value per square foot is around 10% below the five year average sales price in the West End. The Department for Transport will continue to occupy the whole c.160,000 sq ft of office space off an overall passing rent of c.£42.15 per sq ft having elected to remain in a strategically important Government centric location. Recent lettings in Victoria range between £75 per sq ft and £80 per sq ft, suggesting a reversionary potential of around 60% on prime newly refurbished office space. The property also has an existing residential planning consent, granted in 2014, enabling the development of 122 luxury apartments and a further 23 affordable and 14 intermediate units. Prior to agreeing the new lease, Brockton Capital with Stiff & Trevillion and Landid, had drawn up plans for a comprehensive refurbishment, creating an additional 60,000 sq ft over two additional floors within the existing residential planning consent envelope. The sale is likely to attract a range of institutional and wealth preservation buyers from across the globe. JLL also expects high demand from domestic long income and bond investors wishing to offset future liabilities in a continued low interest rate environment. Overseas buyers will also benefit from Sterling’s circa 20% depreciation since the EU referendum. Tony Edgley, Partner at Brockton Capital LLP said: “We expect this asset to attract widespread interest and demand, appealing to a broad cross section of both wealth preservation investors and those proxy bond buyers for whom the c.5% yield advantage between this income stream and a comparable index-linked gilt is a compelling buy.”