Canadian pension fund OMERS, operating through its Oxford Properties business, has acquired the leasehold interest in the retail space at the Grade I listed Royal Exchange building in the City of London.
Canadian pension fund OMERS, operating through its Oxford Properties business, has acquired the leasehold interest in the retail space at the Grade I listed Royal Exchange building in the City of London.
The investment volume comes to £86.5 mln (€104 mln), higher than the minimum amount mentioned when CBRE reported in October 2013 that it had been appointed to advise IBRC Assurance Company on the sale. IBRC Assurance Company was looking for offers in excess of £75 mln (€90 mln), reflecting a net initial yield of 4.9%.
The City Corporation and Mercers are the freeholders of The Royal Exchange. Oxford Properties described it as a 'key strategic addition' to the company's existing City of London office portfolio. The deal is OMERS' first retail acquisition in Europe.
Known as 'the Bond Street of the City', Oxford’s interest at the historic Royal Exchange comprises 4,800 m2 of retail space, let to global luxury brands including Hermes, Smythson, Watches of Switzerland, and Tiffany & Co. The arcade accommodates 39 retail boutiques together with catering outlets let to D&D London and Imperial City. The retail element is currently 95% let, with two of the arcade’s three remaining units currently under offer.
Paul Brundage, senior managing director of Oxford Properties Europe, commented: 'We are pleased to mark our European portfolio diversification with such a prestigious retail acquisition. The deal was a fitting end to a statement fifth anniversary year for our European business.'
'The Royal Exchange is a key purchase within our long term strategic growth plan. In particular, the increasing globalisation of the top-tier retail tenant market provides attractive synergy between this asset and our North American business - both in terms of relationships and expertise. The arcade is also a complement to existing European assets such as St James’ Market. We will be looking to draw on this, as well as our active management expertise, in fulfilling the returns potential of this asset.'
Located directly opposite The Bank of England, at the heart of the City of London, The Royal Exchange was once the City's prime trading floor. It is reputed to be the third most architecturally important building in London after St Paul’s Cathedral and the Tower of London.
Harper Dennis Hobbs advised Oxford on the transaction.
