French asset management giant Amundi is preparing to make a £500m exit from its UK office assets with the intention of investing the proceeds back into mainland European assets.
Amundi, the asset management subsidiary jointly created by Crédit Agricole and Société Générale, has instructed Cushman & Wakefield to advise on the sale of a portfolio of eight office buildings it has largely acquired over the past five years.
Some of the assets were acquired through Amundi’s €1bn acquisition of Union Investments’ Aqua portfolio of European properties in 2015 – a portfolio comprising 17 office properties in the UK, France, Austria, the Netherlands, Finland and Germany.
Two of the buildings in the portfolio are located outside of the capital – insurance group Admiral’s headquarters in Cardiff that is valued at around £90m, a 4.25% yield; and The Equinox in Glasgow, a 65,000 sq ft building acquired in 2015 for £33.4m, a 5.25% net initial yield.
The six London office buildings are understood to have a combined value of more than £400m. However, it is understood asking prices for each asset have not yet been decided.
Knight Frank Investment Management, the investment manager of the assets, is understood to have received an approach through Knight Frank to buy all of Amundi’s UK assets as a whole but it was understood to have decided that it would gain a higher price though individual sales because of the diverse nature of the buildings.
The portfolio includes:
- Ty Admiral, a 220,000 sq ft building on David Street, Cardiff.
- The Equinox, 19 Cadogan Street, Glasgow. A 65,000 sq ft building acquired in 2015 for £33.4m, a 5.25% net initial yield.
- 1 Kings Arms Yard, EC2. A 57,000 sq ft office building.
- 2 Copthall Avenue, EC2. A 31,000 sq ft building acquired in 2014 for £19.4m, a yield of 4.7%.
- 11 Westferry Circus, E14. A 136,000 sq ft building acquired in 2015 for £89.7m, a yield of 5.07%.
- 8 Fenchurch Place, EC3. A 97,000 sq ft building acquired in 2016 for £80m, a 5.41% yield.
- 44 Featherstone Street, EC1. A 43,000 sq ft building acquired in 2013 for £20.2m, a 5.63% yield.
- 46-48 Grosvenor Gardens, SW1. A 17,000 sq ft West End office building.
The central London office investment market has had a slow start to the year, with Q1 City volumes 11% down on the 10-year average at £1.4bn across 20 transactions, according to Savills, which said this could be partly put down to a decrease in the number of opportunities.
The most recent RICS UK commercial property market survey, published last week, showed market sentiment for the UK office sector was improving, with surveyors expecting office capital values to rise in virtually all parts of the UK, although London respondents expected office values to tread water over the coming three months.
The office sector reported tenant enquiries had picked up, although only marginally, for the first time since Q1 2016. The outlook for prime office rents appeared positive, up 38% on net balance, although expectations remained flat for secondary.
All parties declined to comment on the Amundi portfolio sale.
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