Barings, one of the world’s largest diversified real estate investment managers, announces that it has acquired a Grade A office building in the City of London, United Kingdom, from a German retail real estate fund managed by global real estate manager DWS, for £130.5 million, on behalf of a core investment strategy. 

Capital House is a high quality stone clad building, originally constructed in 2003 by Sir Robert McAlpine, comprising 126,000 sq ft of office, retail and ancillary space over basement, lower ground, ground and eight upper floors. The property is currently 55% let to six tenants, including Sainsbury’s and Pret A Manger, with a WALT of 6.2 years.

Barings will undertake a comprehensive programme of active asset management to reposition the buildings into a best-in-class office in the core of the City of London, with strong sustainability credentials.  Plans include the refurbishment of three vacant office floors, enlarging and renewing the reception area to provide tenant amenity, as well installing additional showers and bike storage and overhauling central plan and machinery. The refurbishment of the 6th and 8th floors will focus on the existing terracing and provide high quality internal and external space which will give enviable space in the heart of the City. 

Capital House is located on the north side of King William Street, on the principal north-south arterial routes in the City of London linking the Bank of England and London Bridge. It is surrounded by a huge range of food, drink and entertainment options, while many large businesses have offices in the immediate area.

The building is 50 metres from Bank station, with access to the Central, Northern, Waterloo & City, Circle and District lines on the London Underground, as well as the DLR. Bank station is currently undergoing a major upgrade to increase its capacity by 40%, which is due to complete in 2022. 

Darren Hutchinson, Managing Director, Real Estate Country Head – United Kingdom at Barings, commented: “This transaction allowed us to acquire a prime Grade A office building in the heart of the City of London that also offers a rare opportunity to create unrivalled office accommodation through the repositioning of the building and refurbishment of vacant floors to provide flexible internal and external space to meet current occupier requirements.  This acquisition is also a clear endorsement of the enduring appeal of London as a global business hub as people begin to return to the office.”

Gunther Deutsch, Managing Director, Head of Real Estate Transactions – Europe at Barings, added: “This transaction is our 4th office transaction in Europe this year which reflects our still growing appetite for attractive office acquisitions across Europe, be it refurbishments or new speculative developments. Covid-19 made us look much more closely into central business district (CBD) locations as we believe that an attractive location combined with an attractive building quality will continue to be in strong demand by occupiers. Compared to other continental markets we see good value in the UK especially in the office, logistics and BTR/student housing sectors. In our key European geographies of the Nordics, the Netherlands, the UK, Germany, Italy, France and Spain, we are still keen to acquire real estate in categories ranging from core to value add including speculative developments and forward transactions.”

Ronen Ribak, Head of Real Estate Transactions, Europe at DWS said: “Over the term of our ownership Capital House has delivered attractive risk adjusted returns in terms of income growth and capital appreciation for our investors. We have taken the market opportunity to sell this A Grade asset and will use the opportunity to further diversify the fund. DWS will continue to seek high-quality assets in key locations and priority sectors such as the wider living sector and offices with ESG related value creation opportunities across the UK and Europe.” 

Barings was advised by Savills and CMS.
 

Barings Real Estate 

Barings Real Estate (BRE) offers a broad range of global investment opportunities across the private debt and equity investment markets. BRE invests in all major property sectors and offers an expansive range of financing solutions to real estate borrowers. BRE also specializes in providing government and government-sponsored entity lending products through our wholly owned subsidiary, Barings Multifamily Capital. Follow us on LinkedIn at www.linkedin.com/showcase/barings-alternative-investments.
 

About Barings

Barings is a $382+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment.

*Assets under management as of June 30, 2021