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LONDON-Britain’s biggest public property company, Land Securities, has paid euro 171.1 million ($208.2 million) for Greater London House in north-west London from joint owners Blackstone, JER Partners and Resolution. The deal reflects a 6.8% initial yield, and the 332,678-sf offices generate more than euro 11.8 million ($14.4 million) a year in income from tenants including Young & Rubicam and Bertelsmann Books & Magazines. The circa-1920s building was extensively refurbished in 1999.

“This purchase is consistent with Land Securities’ strategy of focusing on London office investments with the potential for future income growth,” says Land Securities chief executive Francis Salway. “Currently let at low rentals, averaging just over euro 34.80 per sf ($42.30), Greater London House offers extremely good opportunities for rental growth as the London office market recovers.”

Earlier this year, the company reported evidence of improving market conditions for London offices as it posted a rise of nearly 10% in year-end net asset value. At the same time Salway, who on July 14 formally replaced Ian Henderson as chief executive, revealed plans to overhaul the company’s portfolio and focus.

As part of the new strategy, Land Securities is selling its entire industrial holdings, valued at euro 534.4 million ($650.8 million) and creating a senior management committee to focus on three core sectors: retail, London offices and property outsourcing. The committee is distinct from the group board.

“We are confident that these moves will ensure that the group remains at the forefront of the UK property industry,” says Salway. The Greater London House acquisition is the first major acquisition since Salway took over the reins. The vendors were advised by Franc Warwick and Clifford Chance. Jones Lang LaSalle and Nabarro Nathanson advised Land Securities.

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