Sunday, February 04, 2007

Swiss Re Enters $1.18 Billion Sale and Partial Leaseback on London HQ Tower

The Times - February 2, 2007

A niche Mayfair-based investment bank has intervened in the £600 million ($1.18 billion) purchase of London’s Swiss Re Tower, better known as the Gherkin. The 180m (590ft) building at 30 St Mary Axe is set to be the UK’s most expensive office block after its owners, Swiss Re, secured a deal with IVG Asti-cus, the German investment firm, in December. But Evans Randall is poised to take a half share in the 40-storey skyscraper after setting up a joint venture with IVG.

The Gherkin, designed by Lord Foster of Thames Bank, and opened in April 2004 to widespread critical acclaim, is the ultimate in landmark acquisitions. The building is also occupied by an array of reliable and high-profile tenants, including Swiss Re, which has the 15 bottom floors. It is thought that the insurer is taking a 25-year lease on the building. Other tenants include Allianz, the German insurer and Coutts, the private bank.

Evans Randall usually underwrites each deal itself with high levels of gearing then sells equity stakes to a network of wealthy investors. Selling the Swiss Re Tower at £600 million represents a yield of about 4.75 per cent, reflecting the strength of investor demand for City offices. The highest price to date for a single office building is the £520 million paid last January for CityPoint, a 36-storey tower on Ropemaker Street, at a yield of 5.8 per cent.

Evans Randall and IVG are being advised by CB Richard Ellis and Knight Frank. Sphere: Related Content

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