Evans Randall, the UK investment banking and private equity group, has acquired Commerzbank’s headquarters at 60 Gracechurch Street in London’s financial district and 10 Old Burlington Street in the West End of London for a combined £173.5 million.
The double purchase is for Evans Randall’s £1 billion (€1.3 billion; $2 billion) opportunity fund which launched in January in order to take advantage of what the firm perceives as a “short-term yield shift” in the market. The first acquisition was of Condor House near St Paul’s Cathedral for £115 million announced in early January.
The Commerzbank headquarters has been acquired from New Star Asset Management’s open ended real estate fund, New Star UK Property Unit Trust, which has been wrestling with redemptions lately after investors became spooked by a dramatic fall in UK commercial property values. The fund is heavily weighted towards prime office property in London and the South-east.
In a statement, Evans Randall says New Star acquired the office at 60 Gracechurch Street for around £146 million in the fourth quarter of 2006. Evans Randall has acquired it for £127.5 million. The deal reflects a yield of around 5.7 percent, the firm said.
It has also bought 10 Old Burlington Street in Mayfair for £48.5 million from Standard Life, also reflecting a yield of 5.7 percent. At the height of the property boom, yields for trophy assets in London were closer to 4 percent in some cases.
Michael Evans, chief executive of Evans Randall, said, “As owners seek to liquidate their assets we will take the opportunity to acquire high quality properties at realistic yields.”
He revealed all three transactions were completed within a tight timescale of 10 days.
New Star issued a statement saying that part of the proceeds from the sale will be invested in listed property shares to take advantage of significant discounts. It said following the sale, the fund’s liquidity has risen to more than 25 percent.