Deutsche Asset and Wealth Management is under offer to buy the Financial Conduct Authority’s new Stratford headquarters from Lend Lease and London & Continental Railways.
The fund manager has agreed terms to buy the larger of the two prelet office blocks at the International Quarter, E20, (pictured above) in what would be the largest office sale agreed in east London beyond Canary Wharf.
Legal & General is close to finalising a deal for the smaller Transport for London building, further underlining the depth of institutional interest in the capital’s emerging eastern office district.
Lend Lease and LCR marketed the buildings together, guiding a combined price of £550m.
Work on the 513,000 sq ft FCA building commenced this week following a ceremony to mark another milestone for both the regeneration of a once deprived part of east London and the cementing of the London 2012 Olympic legacy.
The FCA signed a 20-year lease for 425,000 sq ft in the Rogers Stirk Harbour + Partners building in May and has options on the remainder of the space. The combined guide price reflected an overall yield of circa 5%.
The 286,000 sq ft TfL building (pictured right), which is fully let to the transport body for a 25-year term, is understood to have been priced more keenly than the FCA building, with both expected to trade above asking. They boast a combined rent roll of £29m pa, reflecting an average overall rent of £36.25 per sq ft.
Deutsche, which declined to comment on the deal, manages several separate account mandates on behalf of Asian funds which have been regular buyers of trophy London assets.
However, in recent months it has been more actively buying for the comingled funds it manages.
In August, Deutsche completed the purchase of 2 St Peter’s Square in Manchester for £100m and last autumn it completed the £70m purchase of 110 Queen Street in Glasgow from BAM Properties.
The FCA and TfL buildings represent the first office phase of the £2.3bn International Quarter, which will eventually span 4m sq ft. The FCA plans to move 3,500 staff into the building in mid-2018.
JLL is advising Lend Lease and LCR on the sales and is joint leasing agent on the scheme with BNP Paribas Real Estate.
