Swiss Re Seeking Sale Leaseback of Landmark London HQ

EasyBourse - September 15, 2006

Swiss Re has put its London HQ building on the market. The 40-storey building is being marketed by DTZ, which is also the letting agent for the building. If the price reaches GBP600 million, it will be the largest ever sale of a single property asset in the U.K.

Swiss Re occupies floors two to 15, and the rest of the building is let to tenants including law firm Mayer Brown Rowe and Maw and Hypo Real Estate Bank International. Four floors remain vacant.

In a statement released later, Swiss Re said it was in the process of evaluating the sale of its London HQ building to benefit from a strong investment market. It would not comment further on the reasons behind the sale. The company said it would continue to have its headquarters in the building following a change of ownership, and would lease back the floors it occupies from the new owner. It said it wanted to maintain its association with the building, which has won an architectural award.

The move comes amid warnings from property analysts of a slowdown in the property investment market. Mike Prew at Lehman Brothers said the investment market 'is a bit narrower, so instead of six bidders you might only get two' but he thinks there is still an appetite for offices in the City of London.

The office space at 30 St Mary Axe didn't let as quickly as expected due to its unusual floorplates which Prew sees as a potential problem for a purchaser. "Architecturally it is very interesting but in terms of practical use as an office building it has inefficient floor plates (floor space on each level) and there are practical problems with a building of a unique shape," he said.

Other very large single property assets in London have failed to sell recently with the GBP540 million sale of Shell Mex House on the Strand falling through in June and Land Securities (LAND.LN) failing to find a buyer for its Devonshire House building on Piccadilly which is being marketed at GBP245 million. Sphere: Related Content