Brockton sells ‘Brexit bargain’ London office for £103.5m

The London-based real estate fund manager has made a £20m price gain in just four months after selling west London office building, 10 Hammersmith Grove.

Brockton Capital, the London-based fund manager, has sold 10 Hammersmith Grove, the asset reported to have taken one of the biggest post-Brexit hits, to Hong Kong investment firm Tai United just four months after buying it from Aberdeen Asset Management for £85 million ($106 million; €100 million).

The building was one of a number of assets across the UK capital city put up for sale following the UK’s decision to leave the European Union in May. Aberdeen had hoped to sell the asset for close to its pre-Brexit value of £105 million. However, Brockton snapped up the 122,744 square foot office property for just £85 million, reflecting a discount of 19 percent, after completing the deal in just 65 hours.

The latest sale of 10 Hammersmith Grove meant Brockton made a 21.8 percent pricing gain in just four months. The price, according to reports, reflects a net initial yield of 5.33 percent and a capital value of £843 per square foot. The building is let to six tenants including Fox, UKTV, Philip Morris and Accor on long leases and produces an annual income of £5.6 million.

Brockton has not disclosed whether the asset was bought and sold from its latest investment vehicle, Brockton Capital Fund III, for which it smashed its fundraising target in February after garnering £860 million in commitments.

The buyer was Tai United, a Hong-Kong-listed investment company reportedly better known for trading medical equipment and mining in Mongolia more than it is for acquiring real estate. The firm is targeting up to £2 billion of property acquisitions in the UK and overseas, according to a report by commercial property news service CoStar.

The Hammersmith Grove purchase represents the second deal between Brockton and Tai United, following the September purchase of 6-9 Buckingham Gate, a high-end residential asset near Buckingham Palace, for an undisclosed fee.

“With a mature economy, a highly-sophisticated business culture and top-grade infrastructure, we believe London is impregnably positioned as a leading global financial centre. The group has strong confidence in the capital appreciation and rental growth of Grade A offices and high-end residential properties in London,” said Meng Zhaoyi, chairman and chief executive officer of Tai United.

Zhaoyi added that the firm would continue to search for high quality assets in the UK, as well as continuing to make similar acquisitions in Hong Kong and mainland China.

JLL advised Tai United Holdings during the transaction, while Brockton was unrepresented.