World Research UK Commercial

City Investment Watch

Walkie-Talkie sale boosts turnover to 51% up on this point last year August 2017

Market comment and GRAPH 1 notable deals City 12-month rolling turnover n n July turnover was £2.1bn across 11 At the end of July, Asian investors deals, equating to an average lot size of have continued to be the most active £190.92m. The sale of The Walkie-Talkie, accounting for 63% of City turnover. They , EC3 accounted for are followed by European investors at 61% of July's turnover. Total turnover 17%, and UK investors at 11%. However, for the year has now reached £7.4bn activity from the Middle East and the US across 77 deals (£96.10m avg lot size), remains relatively quiet accounting for which is 51% up on this point last year. 5% and 3% respectively. Investors from The rolling 12-month total turnover is other regions account for the remainder currently £10.6bn, 41% up on the long- of turnover. term average. n There have been 17 transactions so n In the City market, we are currently far this year exceeding £100m totalling Graph source: Savills - 2017 accurate to end of July monitoring 57 investment opportunities £5.8bn, compared with 19 across the GRAPH 2 totalling circa £4.1bn. Of which, 22 whole of 2016, which totalled £4.4bn. are currently under-offer totalling circa City transactions over £100m £0.8bn, leaving an estimated £3.3bn n Furthermore, the average yield for worth of available opportunities. The purchases over £100m has reduced ten largest available assets account for from 4.97% last year to 4.57% this 75% of total availability. year. n A notable July deal saw Infinitus n The average WAULT for the £100m+ Property Investment acquire The Walkie- transactions has risen from 10 years in Talkie, 20 Fenchurch Street, EC3 for 2016, to 13 years to date in 2017. £1,282.5m, reflecting 3.4% and £1,799/ sq ft. The building is let to 16 tenants n Savills prime City yield remains at including Kiln Underwriting, Markel, Royal 4.00%. The spread between the City Sun Alliance and Liberty Mutual Insurance and the West End is still just 75bps Ltd. The 713,054 sq ft trophy asset with the West End prime yield currently currently has a WAULT of 15 years. at 3.25%. Graph source: Savills - 2017 accurate to end of July The Canary Wharf Group and Landsec GRAPH 3 both sold their 50% stakes, resulting in City & West End average prime yield a record sale for a single UK asset. n July also saw the sale of 20 Canada Square, E14 to a private Asian investor for £410m, 5.36% and £705/sq ft. The 581,457 sq ft virtual freehold building is fully let to McGraw Hill International until January 2028, and BP International until March 2027. Savills advised the purchaser.

Chart source: Savills - 2017 accurate to end of July

savills.co.uk/research 01 City Investment Watch | UK Commercial

TABLE 1 Key deals in July 2017

Address Tenure Area Sector U/x Price Yield CV/sq ft Vendor Purchaser House No Street PC Sq ft FH/LH Gearing term

Fenchurch Office / The Canary Infinitus Property 20 EC3 713,054 vFH £1,282.50 M 3.4% £1,799 Street Retail Wharf Group Investments

Private Asian 20 Canada Square E14 Office 581,457 vFH 983 £2,000 £410.00 M 5.36% £705 Confidential Investor

Riverside Southwark SE1 Office 171,936 FH £144.00 M 4.71% £838 M&G Alduwalyia House Bridge Road

Aldgate Beagle House Braham Street E1 Office 324,126 FH £65.00 M VP £201 Starwood Developments/ Private Investor Tabard Of- Develop- 95,000 51 Eastcheap EC3 FH £47.00 M N/A £526 Cerberus WeWork 6-12 FH ment (proposed) Street fice

Table source: Savills

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