Norway’s sovereign fund Norges Bank Investment Management has made an uncharacteristic play outside of its West End stomping ground, placing Hines’ Sixty London, EC1, under offer for around £325m – a sub 4% yield.
The price for the 235,637 sq ft Midtown asset, part-let to online retail giant Amazon, is significantly above the £311m quoting price.
It is a new part of the capital for the £772bn Norwegian sovereign wealth fund, which has predominantly focused on the West End through its partnership with the Crown Estate.
However, Midtown is fast becoming an investment hotspot as it is set to benefit from the arrival Crossrail at Farringdon Station, from which Sixty London is a 10-minute walk.
Investment into Midtown hit £1.2bn in Q2, 159% up on the £465m invested in Q1 and almost double the 10-year quarterly average of £632m, according to research from Farebrother.
The occupier make-up of the region has also shifted over recent years, away from the traditional legal professions towards media and tech. More recently, the Museum of London has announced plans for a new £250m museum in West Smithfield, and the City of London has created the opportunity for major redevelopment around Smithfield Market with its plans to relocate the City’s major markets out of town.
“Generating returns over a medium to long-term period is quite difficult for investors as London is quite a mature market. So looking at strategic hotspots, infrastructure and new infrastructure such as Crossrail is an obvious option for investors to piggyback on to,” Alastair Hilton, partner, investment at Farebrother, said.
He added:“One of the key drivers for investors being attracted to the Farringdon area is its emerging commercial hub with the development of larger spec, high quality buildings in conjunction with the arrival of Crossrail and the evolving amenity to support the arrival of new businesses to the area.”
Norges’ acquisition of Sixty London is only its sixth property deal in the UK outside of a JV and second solo purchase outside of the West End.
In 2014 Norges acquired 2 King Edward Street in the City of London, EC1, for £585.5m from Singapore sovereign wealth fund GIC.
Meanwhile, the fund continues to retain a 25% stake in 110 assets across the West End in partnership with the Crown Estate, which includes 50% of Regent Street. The duo most recently purchased JLL’s London headquarters at 30 Warwick Street, W1.
And alongside the Crown Estate it also owns a 57.8% stake in the West End estate, the Pollen Estate Trust, has a 50% stake alongside Prologis, in around 41 logistics assets across England, and a 50% stake in the Meadowhall shopping centre in Sheffield with British Land.
Earlier this year Norges picked up Invesco’s 8.2% stake in Shaftesbury for £245m, giving it a 20.86% stake in the West End-focused REIT.
Norges has £4.8bn invested in property in the UK across 194 assets. It has previously said it planned to pump up to £28bn into real estate and was hoping to undertake more deals by itself.
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