GPE Bolsters West End Presence with £51 Million South Crescent Acquisition

Great Portland Estates (LON: GPE) has expanded its West End property portfolio, acquiring a 155-year leasehold interest in 10 South Crescent, WC1, for £51 million from the City of London Corporation. The purchase equates to £708 per sq ft based on the current net internal area (NIA).

The acquisition reflects an initial net yield of 6.8%, factoring in a top-up, and a projected running yield of 7.1% upon the letting of the vacant retail unit. The 72,605 sq ft building presents a significant repositioning opportunity for GPE.

GPE intends to transform 10 South Crescent into a prime, decarbonized headquarters office and retail space, complete with premium amenities and expanded roof terraces.

Currently, the office space is single-let for the next four years at a rent of £67 per sq ft. This presents a reversionary opportunity, considering recent nearby lettings have achieved rates exceeding £125 per sq ft. The potential rental upside is a key driver of the acquisition.

Located near Tottenham Court Road's Elizabeth line station, 10 South Crescent complements GPE's existing cluster of buildings around Alfred Place. This area provides a mix of Grade A headquarters and fully managed space in a desirable West End location.

Harry Buxton, Investment Manager at GPE, highlighted the strategic importance of the acquisition. “10 South Crescent is a valuable addition to our central London portfolio and further demonstrates our ability to find value in our core West End markets.”

Since its 2024 rights issue, GPE has acquired six West End repositioning opportunities with an estimated capital commitment of approximately £440 million. These acquisitions have been made at a combined discount to replacement cost of around 60%.

This acquisition signals GPE's confidence in the long-term strength of the West End office market, despite broader economic uncertainties. The potential for rental reversion and value creation through repositioning could positively impact GPE's net asset value (NAV) and future earnings.

GPE's focus on decarbonization and premium amenities aligns with evolving tenant demands for sustainable and high-quality office spaces. This strategic focus could provide a competitive advantage in attracting and retaining tenants.