Nomura Nearing £234 Million Sale Leaseback of London HQ

Property Week - September 14, 2007

Propinvest is in advanced talks to buy Japanese bank Nomura’s headquarters in the City of London. Propinvest, which owns properties across central London, is thought to be close to agreeing a sale and leaseback with Japan’s second-largest investment bank.

Nomura instructed Drivers Jonas to put its headquarters at 1 St Martin’s Le Grand near St Paul’s Cathedral on the market in May. The 275,000 sq ft building was marketed at £234m, which would reflect a 4.75% yield. The deal has been structured so that Nomura will take a 15-year leaseback on the building. Nomura will pay £11.75m annually, and the rent will increase by 3% every year.

The details of Maud’s financing of the purchase and the amount of equity he has injected have not been disclosed. There was speculation that the sale was faltering because of the credit crunch, but Nomura is thought to have offered to provide the debt to aid the deal.

Other organisations are considering similar types of transactions where debt is offered by the vendor to secure a deal. Media group Emap’s lending banks have indicated that they could offer a loan to potential buyers to aid the sale of the £1.9bn company.

News that Nomura has completed its sale will be a boon for the City investment market, which has slowed down. Yields have risen by 25 basis points since the beginning of the year. While some purchases are completing, some buildings in the City are still struggling to find buyers. Nomura’s decision to market its headquarters, which is home to 1,500 staff, was driven by its long-term operational strategy for its property portfolio.

It followed other large sale and leasebacks carried out by investment banks, such as Merrill Lynch, which sold its European headquarters in the City to GIC Real Estate in a £480m sale and leaseback. Sphere: Related Content