UK/CANADA - The Canada Pension Plan Investment Board (CPPIB) has set up a joint venture with Hammerson to acquire a £183m ($291m) City of London office block.
The long leasehold interest in 10 Gresham Street was acquired from German fund Union Investment. CPPIB will have a 70% share in the joint venture, while Hammerson, Britain's third-largest publicly traded real estate company, will manage the asset on its behalf.
The building was designed by Foster + Partners and comprises 260,000 square feet of high quality offices, retail and ancillary accommodation over eight floors. The principal occupier is Lloyds TSB Bank, with the remainder of the building let to seven other tenants including Milbank Tweed Hadley & McCloy and JC Flowers. Total rents are £10.7m per annum, Hammerson said.
CPPIB and Hammerson first teamed up in December 2009 to buy the Silverburn shopping mall in Glasgow for £297m. The companies said they are taking advantage of rising rents caused by a shortage of prime space in the City of London.
Graeme Eadie, senior vice president, real estate investments for CPPIB said: "Following the creation of our successful joint venture in late 2009 to acquire a company which owns the Silverburn shopping centre in Glasgow, we are delighted to be working once again with Hammerson to buy this highly attractive office investment in the City of London."
Hammerson chief executive David Atkins added: "We are very pleased to again be partnering with CPPIB. This acquisition is in line with our strategy to capitalise on attractive opportunities in the London office market.
"Given the existing lease profile and relatively low rental base this offers an excellent opportunity for us to increase value by using our asset management skills."
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