UK Property Market London & South East

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1 February 2014 Economic Background The UK economic growth was stronger than forecast for the calendar year 2013 and is predicted to strengthen further during UK commercial property returns have improved across all sectors with sustained overseas investor demand spreading outwards from London. UK Economic Statistics The UK economy grew by 1.9% in 2013, its strongest rate since 2007, according to the Office for National Statistics (ONS). Growth in gross domestic product (GDP) for the fourth quarter was 0.7%, down slightly from 0.8% in the previous quarter. Total economic output is still 1.3% below its prerecession peak in Q The UK's service sector, which makes up more than three-quarters of economic output, rose by 0.8% in the fourth quarter, as it did in the third quarter. The manufacturing sector also grew by 0.9%. Growth in the construction sector, which accounts for less than 8% of GDP, fell by 0.3% in the final quarter, despite the recent recovery in a housing market boosted by the government's Help to Buy scheme. The independent Office for Budget Responsibility is currently forecasting growth of 2.4% for 2014, but if the economy continues recovering at its current pace, the OBR's revised forecast may also have to be revised. The International Monetary Fund (IMF) also increased its growth forecast for the UK economy from 1.9% to 2.4%. The headline rate of inflation has continued to fall. The Consumer Prices Index (CPI) showed that prices grew by just 1.9% in the year to January 2014, the first time in more than four years that the rate has dropped below the Bank of England's 2% target. This has eased pressure on interest rates and the Bank of England s Monetary Policy Committee (MPC) continues to maintain the historically low Base Rate of 0.5%. It has also revised its forward guidance indicating that interest rates will not rise until the UK economy shows sustained growth over a longer period. UK House Prices The average price of a house across the UK has hit 250,000 for the first time at the end of 2013, according to the Office for National Statistics (ONS). This means that tens of thousands more buyers will pay Stamp Duty Land Tax (SDLT) at the 3% rate, which starts at the 250,000 threshold. However both the largest lenders, Nationwide and the Halifax showed house price increases of 8.4% and 7.5% respectively, based on loans made by them, with average house prices in the range 173,400 and 176,000. There is wide regional variation with Nationwide s data indicating that average London house prices were 14% higher at the end of 2013 than their previous peak in The typical London home now costs 345,186.

2 London saw the greatest price increase with the north of England registering the slowest annual price growth, up just 1.9%. There was a 7% year-on-year rise in house prices in Northern Ireland, Scotland registered a 3.7% increase over the same period, and prices were up 6.1% in Wales. Cost of Finance Since our last update in November 2013, 3 month LIBOR has remained relatively flat currently running at 0.52%. With the improved economic outlook and potential earlier rises in Base Rate on the horizon, SWAP rates have risen since our November report with the 3 year SWAP now up another 22bps at 1.40% and 5 year SWAP up just 19bps at 2.04%. De Montfort University, in its influential Commercial Property Lending Market report, based on mid data and published in December 2013, confirmed industry sentiment that the commercial real estate lending environment is becoming more benign. The report revealed a number of promising indicators that the property lending market is cautiously emerging from the worst of the credit squeeze. The report also showed that of the 25 billion of new loans covered by the study about 50% of the total volume of loans was for sums of 5 million or less. More recently Kingfisher Property Finance report that, although banks appetite for lending is increasing, the finance market is multi-tiered with regional variations depending on the location of the property and the relationship of the borrower with the lending institution. Banks continue to compete for the most attractive loans with borrowing levels for 5 year money for smaller loans below 15 million at Loan to Values (LTV) in the range 60% to 70% all-in interest costs would be in the range 2.75% to 5.25% before amortisation, dependent on the level of hedging required. However above the range 15 million to 20 million for properties leased for terms of 15 years, all in interest costs would be closer to 4.0%. For borrowers seeking lower LTVs of circa 50% on well leased properties, there would be more options including interest only loans or limited hedging requirements, with a proportion of the loan based on floating rates, which could reduce the overall cost of debt further. UK Commercial Property Market Trends The IPD Monthly Index for December 2013 showed total annual returns of 10.9% for all UK property, substantially higher than for the previous year. The trend has continued in the current year with January 2014 Monthly Index showing overall returns of 1.1% and annual overall return up at 11.7%. Offices and Industrials were the strongest performing sectors with overall annual returns of 15.8% 15.2% respectively. Overall annual returns for retail were lower at 8.1% with 5.5% of that annual growth coming in the 6 months to January Central London Office Market Central London office take-up rose by 6% to 3.8 million sq ft, the highest quarterly total for 3 years as reported by Knight Frank. Leasing activity rebounded in 2013 after weak performance in Q take-up was 20% higher than the long-term average. This took total take-up for the year to 13.6 million sq ft, the highest since The technology, media and telecoms (TMT) sector was the most active throughout the year, accounting for 30% of take-up and four of the five largest transactions. Knight Frank reported a year-end supply total of 16.1 m sq ft, which reflected a vacancy rate of 7.0%. This was significantly lower than the 17.9 m sq ft on the market at the end of March 2013 with almost 2.0 million sq ft of supply taken out of the market in nine months demonstrating the strength of the current market. Knight Frank s figures show 6.7 m sq ft currently under construction across Central

3 London due for completion in 2014, almost half of which is already pre-leased. Looking ahead, there is just 1.2 m sq ft of space under construction and due for completion in 2015, with a further 1.7 million sq ft of possible completions yet to commence on site. City of London Take-up in the City finished the year strongly, rising by 69% over the quarter to 1.8 million sq ft, 51% above the 10-year average of 1.2 million sq ft, according to CBRE. The annual total was up at 5.4 million sq ft, a 32% increase from the 4.1 million sq ft in 2012, and compares favourably with a 10- year annual average of 4.9 million sq ft. The majority of the space taken over the year was secondhand at 3.2 million sq ft. and pre-letting was also above trend at 1.0 million sq ft compared with a 10- year average of 700,000 sq ft. There were four deals of over 50,000 sq ft in Q4 2103, the largest being a 310,000 sq ft pre-let by Schroders at 1 London Wall Place. In 2013, there were 19 deals over 50,000 sq ft, of which four were in excess of 100,000 sq ft, almost twice the number in 2012 and five times the number in Q4 Occupier take-up was driven by banking and finance (36%), TMT (21%) and business services (15%). The annual total of City development completions was 1.1 million sq ft, 36% below the 20-year average of 1.7 million sq ft million sq ft is scheduled for completion from 2014 to 2017 with completion peaks in the cycle occurring in 2014 with 3.5 million sq ft and 2017 with 4.5 million sq ft. Approximately 9.6 million sq ft of the new development planned over this period is speculative, with 2.4 million sq ft planned in Pre-letting activity in the City continues apace according to Colliers. British Land s Leadenhall Building, EC3, is now over 50% leased, with completion of the latest pre-let to serviced office provider, Servcorp at a headline rent of per sq ft (netting back to circa 60 per sq ft after incentives) with 24 months rent-free for a 15 year lease with a break at 10 years. Hachette have agreed to take 95,000 sq ft at Quadrant Estates/Orion Capital Managers Carmelite development. The publisher will pay 55 per sq ft, ranging up to 65 per sq ft for best space on a 15 year term with 23 months rentfree. In addition, Schroders has signed for 310,000 sq ft at Brookfield and Oxford Properties London Wall Place at circa 60 per sq ft and M&G Investments is believed to be under offer at 120 Fenchurch Street on 300,000 sq ft. Prime rents in the City rose by 9.1% to 60 per sq ft year-on-year as reported by Knight Frank, who forecast City rents will rise to 65 per sq ft by the end of 2014, and then to 75 per sq ft by the end of 2018, an increase of 25%. West End Take up in Q was 654,836 sq ft (below the three year average of 788,101) and down from 896,064 sq ft in Q3 according to Strutt & Parker. Total 2013 West End take up was 2,798,500 sq ft which is broadly in line with 2012 (2,886,400 sq ft). The highest take up was in North of Oxford Street with 686,600 sq ft. The largest year on year increase was in Paddington, up 110% from 86,950 to 183,000 sq ft. Mayfair, has also saw a large increase take up, showing a 33% increase over 2012; 534,700 compared to 400,800 sq ft in the previous year. St James s had the lowest take up, down 10% to 171,800 sq ft from 190,840 sq ft in 2012 however this is a consequence of a lack of supply, rather than lack of demand. West End availability, excluding under construction, is 3.83 million sq ft with vacancy rate of 5.23%. Availability, including under construction stands at 5.76 million sq ft representing a vacancy rate of 7.87%. Developments completed in Q included Standard Life s 44,840 sq ft 23 King Street, British Land s 10 and 30 Brock Street with 112,700 sq ft and 21,330 sq ft respectively, Freshwater s 119,270 sq ft Africa House and Legal & General s 32,800 sq ft 76 Wardour Street.

4 The highest headline rent achieved in the West End in 2013 was per sq ft at Standard Life s 23 King Street in St James s, SW1 where Temasek signed a 10 year lease of 8,375 sq ft on the 5th and 6th floors. NOM (UK) Limited leased the 5 th & 6 th Floors at Morgan Capital Partners 8 Hanover Street building at rents of per sq ft and 115 per sq ft respectively. Also Helical Bar took 7,893 sq ft at Mitsui Fudosan s 5 Hanover Square at a headline rent of per sq ft. Outside Mayfair, Twitter is taking a 10 year lease of 27,700 sq ft at the Crown Estate s AirW1, 20 Air Street at a rent of per sq ft and M&C Saatchi Ltd have taken the 4 th Floor of Grafton House, 2-3 Golden Square at a rent of per sq ft, a record rent level for the location. Midtown Take-up in Midtown increased significantly to reach 600,000 sq ft in Q4 2013, up from 200,000 sq ft in Q3 as reported by CBRE. The total take up for the year was 2.2 million sq ft, the highest level since 2000 (2.5 million sq ft). Take-up in 2013 was supported by a number of large deals over 100,000 sq ft, including 725,000 sq ft pre-let to Google at King s Cross in Q1. TMT occupiers accounted for 61% of take-up in 2013, attracted by large blocks of new accommodation and the rental discount from the West End. This compares with a 10-year annual average of 28%. The trend continued in Q4, with the TMT sector taking 43% of the Midtown total. Development completions totalled 400,000 sq ft in 2013, which is in line with the 20-year average. In Q4, there was 5.3 million sq ft scheduled for completion from 2014 to 2017, averaging at around 1.3 million sq ft per year. 3.8 million sq ft of this projected supply is speculative but much of this space is dependent on pre-letting and will only proceed subject to market conditions. The demand for new space from the TMT sector has supported strong rental growth of 9.5% in 2013, with prime rents rising to per sq ft according to CBRE although BNP Paribas Real Estate state that rents in Covent Garden and Holborn increased to 60 and 70 per sq ft respectively. Docklands Take-up in Docklands fell by 77% in the final quarter to 78,100 sq ft, 67% below the 10-year average of 200,000 sq ft. Despite this, the total for the year reached 500,000 sq ft, exceeding 2012 and 2011 by 19% and 9% respectively, but remained below the 10-year annual average of 900,000 sq ft. The largest deal in Q was HSBC commitment to an additional 27,100 sq ft at 1 Canada Square following its 54,200 sq ft acquisition at the same address in the previous quarter. Construction in the Docklands market was very quiet with no new buildings going under construction or being completed during Q Looking ahead, Q will see the completion of Canary Wharf Group s 541,690 sq ft 25 Churchill Place, E14, which is 47% prelet to the European Medicines Agency. Prime headline rents in Docklands stand at per sq ft. South Bank Take-up on the Southbank fell to 249,000 sq ft in Q Whilst this is a fall of 70% it should be noted that Q3 included News International taking 430,000 sq ft at the Place. In 2013 as a whole, take-up reached 1.45 m sq ft. Even stripping out The Place this is highest level of take up since The Southbank is emerging as a key location within the Central London market and is attracting tenants from across the sectors, with key deals in Q4 from the professional services and public sectors.

5 As predicted by CBRE prime Southbank rents ended the year at per sq ft. By contracts BNP Paribas Real Estate quote prime Southbank rents at per sq ft. Both agents forecast further increases over the next two years, driven by improving occupier confidence resulting from the economic recovery and the large volume of new development around London Bridge and Waterloo. M25 & Thames Valley Office Markets Total M25 office take up Q was close to 1 million sq ft for the third time in 2013, a big improvement on 2012 according to Colliers. Annual take-up rose by 12% year-on-year to reach 4.4 million sq ft which was the highest yearly total since Knight Frank reported take-up 2.58 million sq ft in the M25 markets in 2013, its highest annual total since While Q4 take-up of 611,821 sq ft was the lowest of any quarter in 2013, activity consisted of 43 transactions, the highest number in a single quarter since Q The M25 s only deal in excess of 50,000 sq ft in Q4 took place in Bracknell, where Honda leased 69,624 sq ft at Reflex. There were eight leases of new M25 office space, the largest being Novo Nordisk s lease 39,343 sq ft at 3 City Place, Gatwick. M4 take-up was 427,899 sq ft in Q4 2013, down 33% on Q3 but in line with the ten year quarterly average. The M4 s largest deal was Bechtel lease of 77,692 sq ft at Wainbridge s First Central 200 in Park Royal, West London at a headline rent of per sq ft. Reading was the most active M4 market with eight deals in Q4, including two totalling 20,000 sq ft at The Blade developed by PMB Holdings and Aviva Investors. M3 take-up was just 123,900 sq ft in Q although the annual total for 2013 was 1.05 million sq ft, 65% above the 2012 total and 11% above the ten year average. Four of the M3 s 11 deals were in Woking, the largest being Yum s lease of 31,640 sq ft at Barrett s Orion Gate on Guildford Road close to the railway station. Strong take-up and relatively limited development completions have resulted in the M25 vacancy rate reducing from 7.4% to 6.9% during Q4, its lowest level since Q Knight Frank reported that total speculative development completions amounted to just 367,000 sq ft in 2013, 40% below the 10-year annual average level. Q4 saw the completion of two speculative schemes, Exton & Rockspring s 61,854 sq ft Flow building in Staines-upon-Thames and Abstract s 98,471 sq ft of offices at Renaissance, Croydon which is now 40% pre-let. Prime M25 and Thames Valley rents range from per sq ft in Chiswick, 32 per sq ft in Uxbridge, Staines, Heathrow and Maidenhead, to per sq ft in Guildford & Reading to the to per sq ft in Slough, Croydon, Gatwick and Bracknell. Office to Residential Conversion The Government s recently enacted Permitted Development policy of allowing conversion of office buildings to residential is changing the market dynamics in Croydon, South London. The London Borough has until recently had a glut of vacant office buildings dating from the 1960s and 1970s, when it had become an attractive target for occupiers relocating from Central London in search of lower office costs. According to a report by local agent Sinclair Clark, since February 2013 around 1.1 million sq ft of offices, in 16 buildings, has changed hands, principally for residential development but also for short term office leasing followed by residential redevelopment. These sales for residential conversion have lifted capital values for redundant office buildings from circa 30 per sq ft in January 2013 to their current levels of 115 to 120 per sq ft. In addition the available office stock in Croydon has fallen from around 1.8 million sq ft to an estimated 750,000 sq ft over the last year.

6 Investment Market Activity UK property investment transaction volumes for the full year ending December 2013 totalled 53 billion, a 50% increase on 2012 volumes. Overseas investors continue to dominate this activity especially for larger deals in Central London but UK institutions returned to the market as with their highest level of net investment since Colliers comment that all property equivalent yields on the monthly index were down 30bps in 2013 as a result of this surge in activity. They expect overseas investors to continue to make large investments and the increase in fund inflows in 2013 suggests UK institutions will continue to be net investors during Central London investment transactions were 8.0 billion in Q4 2103, up from 4.2 billion the previous quarter, taking the total Central London volume for 2013 to 19.4 billion according to CBRE research. The highest volume of transactions in Q4 was in the City with 2.9 billion compared with the West End not far behind at 2.4 billion. Likewise, total investment volume for the City in 2013 at 6.8 billion just topped the 6.6 billion turnover in the West End. In 2013 there were 15 deals over 100 million in the City and 20 such deals in the West End, six of which were in the final quarter. The largest investment deal of Q4 was the acquisition by Singaporean Sovereign Wealth Fund (GIC) of Blackstone s 50% share of the Broadgate Estate, EC2 for 1.7 billion, although a similar price was paid for the 100% interest of the More London estate on the South Bank by Kuwaiti investor St Martins. The largest West End transaction in Q4 was the purchase of Shell-Mex House, 80 Strand WC2 by the private German investor, Sirosa for 610 million. Overseas investors made up 68% of overall London investment turnover. Asian investors were the largest group with 24% of the total volume followed by Middle Eastern with 19% and US investors a more modest 8% in 2013, down from15% in UK property companies were active with 16% of the total Central London investment volume with UK institutions taking a further 10%. Prime City of London yields moved in to 4.5% by year end, down 50bps over 2013, and prime West End for offices yields now standing at 3.75%. Investors are also moving out to the regions with investors seeking lore attractive yields away from London. Investment volume for South East offices totalled 1.48 billion in the second half of 2013 as reported by Knight Frank and CBRE stated that the total sales volume for South East offices in the full year 2013 was 3.2 billion in 118 transactions. Bidding for prime and good secondary assets has become increasingly competitive, particularly in West London and the Thames Valley, with pricing often 100 basis points ahead of quoting. Yields for prime 15-year income moved in to 4.75% as evidenced by the sale of Building 8, Chiswick Park, leased to QVC for a further 19.7 years, which was acquired by Standard Life for 71 million. More typical yields for prime buildings leased to strong tenants for terms in excess of 10 years are in the region of 5.57% for locations close to London but only moving out to just sub 6.00% for locations on the edge of the region such as Oxford. Prime office yields in other major regional cities have hardened over the year with prime yields in Birmingham and Manchester at 5.75%, Leeds at 6.0% matched by the three major Scottish office markets of Edinburgh, Glasgow and Aberdeen. Southern UK cities such as Bristol and Southampton offer more attractive yields of 6.25% and 7.0% respectively. Outlook The UK economy grew during 2013 at a stronger rate than had been predicted at the outset of the year. This GDP growth is now expected to strengthen further in 2014 with some sources suggesting somewhere in the range of 2.5% to 2.75%, i.e. stronger growth than the 2.4% predicted by the Bank of England and IMF.

7 Most commentators anticipate strong overall performance from the UK commercial property sector, with London and the South East continuing to out-perform the rest of the country. Overall property returns in 2014 should exceed 2013 levels but income growth will be an important factor as the significant yield compression seen in Central London offices over the last three years and in South- East offices over the last year are unlikely to be repeated. Investors seeking higher returns will need to consider properties with re-gearing or redevelopment potential or widen their horizons to include regional cities and secondary properties. Offshore capital inflows continue to dominate the Central London markets although some offshore investors who purchased in the depth of the recession in are now able to realise substantial capital and currency gains by selling into this bull market. The main constraint to increased investment activity continues to be the relative lack of stock available on the market. Outside London, South-East and prime regional city offices attract capital from UK based fund managers and increasingly overseas investors with renewed rental growth potential offsetting the lower yields available now. Looking further forward the fast approaching Scottish Independence Referendum to be held in September 2014 and the run up to the UK General Election in May 2015 may result in some uncertainty in the latter part of the year but the underlying strength of the UK economy points to solid overall property returns for 2014 as a whole. Investment Transactions City of London The Broadgate Estate, EC2 Singaporean Sovereign Wealth Fund GIC purchased Blackstone s 50% share of the Broadgate Estate for 1.7 billion. The estate comprises some 3,400,000 sq ft in 16 buildings leased to some of the world s largest corporations including UBS, RBS, Deutsche Bank and the European Bank for Reconstruction and Development (EBRD) Royal Exchange, EC3 Oxford Properties purchased the leasehold interest in the retail space at the Grade I listed Royal Exchange for 86.5 million, its first direct retail investment in the UK. The City Corporation and Mercers are the freeholders of The Royal Exchange. The investment comprises 51,400 sq ft of retail space, let to global luxury brands including Hermes, Smythson, Watches of Switzerland, and Tiffany & Co. The purchase price shows the buyer a net initial yield of 4.45%. The St. Botolph Building, 138 Houndsditch, EC3 Deka Immobilien purchased this 558,000 sq ft office building on behalf of its Deka-ImmobilienEuropa fund for 464 million. The building, developed by Minerva in 2010, is multi-let to law firm Clyde & Co and insurance brokers Lockton Associates and Jardine Lloyd Thompson. The deal reflects a net initial yield of 5.15% and a capital value of 832 per sq ft.

8 20 Old Bailey, EC4 Blackstone acquired this 200,000 sq ft office building for around 90 million from Mitsui Fudosan. The property has short-term income of around 18 months and potential for the addition of about 50,000 sq ft. The purchase price equates to circa 450 per sq ft. Midtown 22 Kingsway, WC2 Derwent London purchased this eight-storey 91,400 sq ft property from Israeli investors for 59.3 million. The building is leased to King s College London until September 2025 with a tenant s break option in The deal includes the freehold interest of the 44,000 sq ft Peacock Theatre on Portugal Street WC2, which is leased to the London School of Economics until 2054 at a nominal annual rent of 1. The purchase price reflects a net initial yield of 4.78% and a capital value of 650 per sq ft for the office element. West End Shell-Mex House, 80 Strand WC2 Sirosa, controlled by the German Conley family, purchased this 550,000 sq ft office building from US private equity firm Westbrook Partners for 610 million reflecting a net initial yield of 4.2%. The property is multi-let to tenants including Pearson, Shell, Vodafone and Omnicom, generating an annual rent of 25 million a year. The purchase price equates to about 1,100 per sq ft. Devonshire House, Piccadilly, W1 The Ponte Gadea Group, owned by Spain s richest man Amancio Ortega, purchased this 175,000 sq ft office block facing Green Park for more than 400 million from an American trust in which a key investor was Lehman Brothers. Rents of per sq ft have been achieved for refurbished office space in the block. The sale price reflects a capital value in excess of 2,285 per sq ft. Macdonald House, One Grosvenor Square, W1 Mumbai-based property developer Lodha Group purchased the 130,000 sq ft Canadian High Commission building for 306 million. The building has potential for conversion to residential. The sale price equates to a vacant possession value of 2,350 per sq ft

9 431/451 Oxford, Street, W1 Pearl & Coutts sold this 53,000 sq ft retail and office building to luxury-property investor, Tribeca Holdings for 127 million, reflecting a net initial yield of 2.79% and a capital value of 2,493 per sq ft Hanover Square, W1 Legal & General sold the Freehold interest of this 48,664 sq ft retail and office building to a Private Far Eastern group for 85.5 million. The property has the benefit of planning permission for a new 56,000 sq ft office development. The sale price equates to 1,757 per sq ft. 50 Pall Mall, SW1 Legal & General sold this 35,000 sq ft office building to a private European buyer for 63 million. The building is multi-tenanted with an average unexpired term to tenant break options of just 3 years 10 months. The sale price reflects a net initial yield of 3.8% and a capital value of 1,800 per sq ft. Docklands Royal Wharf, E16 Oxley Holdings Limited, a Singapore-listed property developer, has agreed to buy Royal Wharf, close to London s City Airport, from Ballymore Group, for around 200 million. Oxley intends to develop the whole 40 acres with about 3,400 residential units and a variety of commercial, retail, leisure and educational facilities creating an entirely new district for London. Southbank More London, SE1 Kuwaiti investor St Martins purchased the 13-acre More London estate from London Bridge Holdings, for around 1.7 billion. The estate comprises about 2.1 million sq ft of offices with retail and restaurant uses at ground floor level. Major occupiers include the Greater London Authority (London Mayor s Office), accountants EY (formerly known as Ernst & Young) and lawyers Norton Rose.

10 Outer London Gateway House, 28 The Quadrant, Richmond, Surrey Rockspring has sold the final asset from its St. Martin s South East office portfolio, for 44.1 million reflecting a net initial yield of 5%. The property comprises 62,000 sq ft of offices, fully let to Reed Exhibitions, seven shops and a multi storey car park. Richmond Riverside, Richmond, Surrey Orchard Street Investment Management has completed on the acquisition of this mixed use complex, on behalf of St James s Place, from a fund advised by J.P. Morgan Asset Management, for 64.5 million. The property fronts the River Thames close to Richmond Bridge and provides 132,965 sq ft of commercial space, comprising six selfcontained office blocks, eight high street shops, three bars/restaurants, 28 long leasehold flats, a boathouse and 122 car parking spaces. The sale price reflects a net initial yield of 4.9%, rising to 6.25% when fully let. Quadrant House, The Quadrant, Sutton, Surrey The 200,388 sq ft headquarters of Reed Business Information was purchased by a private Middle Eastern buyer for 45.3million. The building comprises two inter-connecting offices towers leased to RBI until June The current passing rent is 21 per sq ft. The sale price equates to 226 per sq ft. South-East Regional Sales Unilever House, Leatherhead, Surrey Lembaga Tabung Haji, the Malaysian Hajj pilgrims fund and Gatehouse Bank acquired the Freehold of Unilever s 176,654 sq ft UK headquarters building for 75.8 million from LondonMetric Property. The price reflects a net initial yield of 6.18% and a capital value of 429 per sq ft. Leavesden Park, Hercules Way, Watford, Hertfordshire Apollo and M&M Asset Management purchased three interlinked office buildings totalling 190,848 sq ft from Praxis Holdings for 46 million in an off market deal. The buildings are mainly leased to British Telecom. The purchase price equates to $241 per sq ft.

11 Broers Building, Madingley Road, West Cambridge, Cambridgeshire Nafield Properties, a joint venture between Turnstone Estates and Burall Developments, sold the 42,911 sq ft office building to the University of Cambridge for 13.3 million. The sale price reflects a net initial yield of 6.9% and a capital value of 310 per sq ft. Other Regional Sales Portwall Place, One Portwall Lane, Bristol Blackrock purchased the long leasehold of this 162,581 sq ft office property, which is being sold out of liquidation by the Irish Bank Resolution Corporation (IBRC), owner of the assets of Anglo Irish Bank for more than 50 million reflecting a net initial yield of around 7%. Occupiers include DAC, Beachcroft and accountant Smith & Williamson account for three-quarters of the rental income with12 years unexpired on their leases. Other tenants include Aecom and Towry Services. Paragon House, Homer Road, Solihull This 97,000 sq ft office building has been purchased from the LPA receivers by the occupier the Paragon Group of Companies for 20 million. The purchase price equates to 206 per sq ft Fusion Point 2, Dumballs Road, Cardiff Fidelity Worldwide Investment purchased this 47,792 sq ft office building from the developer, Fusion Point Development, a joint venture between Robert Hitchins and Landmark Cardiff for 11.2 million. Deloitte, Balfour Beatty, Involegal and ACAS currently occupy the building with a weighted average lease to expiry of 7.9 years. The purchase price reflects a net initial yield of 8.6% and a capital value of 234 per sq ft. 3-5 Morrison Street, Edinburgh Axa Real Estate Investment Management purchased this 82,282 sq ft office building its Caeser Fund from Climate Change Capital for million. The five-storey building also includes 20,408 sq ft of retail and a four-screen cinema. It has an average unexpired lease term of 8.85 years. The purchase price reflects a net initial yield of around 6% and a capital value of 306 per sq ft. Contacts Peter Dewar peter@coh.eu Nigel Hunt nigel@coh.eu Marcus Perkins marcus@coh.eu Dick Grillo dgrillo@coh.eu