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AEW Europe acquires £325m UK office portfolio

The Paris-based firm is set to acquire the portfolio from SEGRO for a price representing an initial yield of 5.6 percent.

Paris-based real estate investment management firm AEW Europe has agreed to purchase a portfolio of offices on the Bath Road in Slough for £325 million (€441 million; $484 million) from SEGRO, a London-based real estate investment trust (REIT).

The sale price represents a net initial yield of 5.6 percent, a topped-up net initial yield of 6.3 percent and a small premium to book value as of 30 June 2015. The transaction is expected to complete in January 2016.

The portfolio, which fronts SEGRO's Slough Trading Estate, contains 972,300 square feet of office properties and one office building currently being developed on a speculative basis. SEGRO will continue to manage the development of the building under construction until practical completion.

“With this disposal, over the past four years, we will have disposed of over £2.2 billion of suburban offices and other, non-core, assets and invested over £1.7 billion in the acquisition or development of new assets,” commented David Sleath, SEGRO's chief executive.

The transaction follows other notable deals for AEW Europe in 2015 including the acquisition of four Paris offices for €300 million in November and the purchase of the ‘Celsius Portfolio’ from the Los Angeles-based real estate investment manager, CBRE Global Investors.

In July the firm established a partnership with Chinese sovereign wealth fund, China Investment Corporation (CIC), to acquire Celsius comprising 10 shopping centers in Belgium and France which were valued at over €1.3 billion.