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Great Portland Estates has exchanged contracts to purchase 90 Queen Street in London for £46mln (about EUR 50 mln). The office and retail building was built in 1996 and comprises just over 6,000 m² of space. The property is the UK office of Italian bank Intesa Sanpaulo and is occupied under a lease until 2017, with a tenant option to break in 2013.

The retail units are occupied by Lloyds Banking Group, Pret-a-Manger and Hugo Boss.

GPE said the rental income of £3.9 mln per annum will add approximately 1p to group earnings per share and the acquisition will show a net initial yield of 8.2%.

Ben Chambers, investment director of GPE said, 'The property sits in a prime location, is easily and quickly capable of being returned to market should the tenant break, and gives us a high running yield in the meantime. The break will come at a time when we forecast limited supply in the City market and, at a capital value per square foot for the office component of £565, we are buying land and a building at beneath replacement cost, without the development risk and with an attractive income return.'

GPE is a central London investment and development company, which converted to tax-transparent real estate investment trust (REIT) status in January 2007. It is also a constituent of the FTSE 250 index. At end-June 2009 GPE's portfolio, including its share of joint ventures, was valued at just over £1 bn.