Ballymore sells London office building to Kennedy Wilson for €205m

Irish property developer Ballymore has completed the sale of its landmark office building One Embassy Gardens in London to Kennedy Wilson for £177.5 million (€205m).

The 156,000sq ft building is currently let to the world’s biggest book publisher Penguin Random House, leading illustrated reference publisher DK Publishing, and global leadership search firm Perrett Laver. The sale price reflects a 4.5 per cent yield.

Kennedy Wilson said the asset is 82 per cent occupied by Penguin Random House, with 8.3 years of term on the lease and a two-year rental guarantee from Ballymore on the vacant space.

One Embassy Gardens is part of the wider Embassy Gardens estate, a new riverside district developed by Ballymore and immediately adjacent to the US embassy and close to Apple’s new 500,000sq ft headquarters at Battersea Power Station. The Grade A office building was designed to minimise energy and water consumption.

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In a statement Ballymore said the tenant profile, along with Apple’s new nearby campus, underlined the “strong appeal” of the Nine Elms district as a commercial location.

Ballymore worked with architect Lee Polisano of PLP Architecture to design One Embassy Gardens.

Commenting on the transaction, John Mulryan, group managing director at Ballymore, said: “The sale of One Embassy Gardens shows that the investment market now sees Nine Elms as one of London’s most compelling commercial locations. With the US embassy, Apple and Penguin Random House and DK already committed we are proud to be part of this area’s ongoing growth story.

“The future development of our 300,000sq ft EG:HQ development directly adjacent will add further critical mass to the establishment of Nine Elms as a commercial centre in London.”

Office asset

In a statement, Mike Pegler, head of UK for Kennedy Wilson, said: “One Embassy Gardens represents an excellent opportunity to recycle proceeds following the recent opportunistic sale of our central London office asset, Friars Bridge Court, where we sold at a capital value of £1,600 per sq ft and a cap rate of 3.5 per cent.

“We are now buying new modern stock at £1,140 per sq ft and cap rate of 4.5 per cent, adding $12 million of day-one net operating income to Kennedy Wilson with ongoing growth prospects as the area becomes more established and rents converge to levels similar to other central London submarkets.”

He described it as a “high-quality, green-certified asset of scale with a secure income stream within one of the fastest-expanding submarkets of central London” that would benefit from a tech-clustering effect when Apple opens its HQ in 2022.

Agents JLL and Savills acted for Ballymore, while Cushman and Wakefield acted for Kennedy Wilson.

Focus

Ballymore is a family-run developer established by chairman and group chief executive Sean Mulryan and his wife Bernardine in Ballymore Eustace in 1982.

Ballymore said its UK development priorities for 2021 include Edgware, Deanston Wharf, Bishopsgate Goodsyard and Ladbroke Grove ,while in Dublin its focus is on the Connolly Quarter development and partnering with Diageo to create a new neighbourhood at the Guinness brewery at St James’s Gate.

The Irish company has significant land holdings, with around 10,000 homes currently under construction across the UK and Ireland.