Great Portland Estates enhances portfolio with strategic property swap in London’s West End

Great Portland Estates plc (GPE) has executed a strategic property exchange with the City of London Corporation (CLC), marking a significant transaction in London’s competitive real estate market. The deal involves GPE acquiring a long leasehold interest in The Courtyard at 1/3 Alfred Place for £28.6 million and simultaneously selling its interest in 95/96 New Bond Street for £18.23 million.

Details of the Transaction

The acquisition of The Courtyard, costing £462 per square foot, aligns with GPE’s strategy to enhance its real estate portfolio by adding more high-quality office spaces. The Courtyard currently comprises 62,000 square feet of vacant office and partially let retail space. Conversely, the sale of the 95/96 New Bond Street property, valued at £2,039 per square foot, represents a strategic divestment of a lower-yielding asset. The net cash payment from GPE to CLC will be £10.4 million, with the transaction set for completion in January 2025.

Future Plans for The Courtyard

GPE plans a substantial refurbishment of The Courtyard, with an investment of approximately £62 million earmarked for the development. This refurbishment, scheduled to start in Q4 2025, aims to transform the property into a top-tier ‘Fully Managed’ office space, expected to generate an annual rent roll of £8.0 million from office spaces and an additional £1.0 million from retail. This project forecasts a running yield exceeding 6% and an ungeared internal rate of return (IRR) of over 11%.

Strategic Location and Development Synergy

Located in a prime West End location near the Elizabeth line station at Tottenham Court Road, The Courtyard is part of a strategic area for GPE. The property is set to become part of a cluster of Fully Managed buildings, providing operational efficiencies and enhanced offerings for tenants. This development is pivotal as GPE aims to expand its Flexible portfolio beyond one million square feet.

Executive Insights

James Harrop-Griffiths, Investment Manager at GPE, remarked on the transaction: “This transaction represents a unique opportunity to recycle capital from a low-yielding retail asset into a fantastic office development opportunity for our Fully Managed business plan. The Courtyard is well-located and full of character, making it perfectly suited to our Fully Managed offer. We are creating a ‘Flex cluster’ within an already popular area of the West End as we advance towards our ambition.”

This property swap illustrates GPE’s adept strategy in capitalizing on prime real estate opportunities and reflects broader trends in urban commercial property management, where flexible and managed office spaces are increasingly preferred by businesses seeking premium amenities and strategic locations.