British Land Co., the U.K.’s second-largest real estate investment trust, agreed to buy two buildings in central London’s Mayfair district and plans to convert them into luxury homes, shops and offices.
British Land spent 129.6 million pounds ($202 million) for the properties, the company said in a statement today. The purchase includes almost an acre of land in the neighborhood, which along with nearby St. James’s comprise the London districts with Europe’s biggest concentration of hedge funds.
The plan is British Land’s latest conversion of office space into upscale mixed-use properties. It’s completed 143,000 square feet of London residential developments since early 2009. The Mayfair properties, located near the Ritz hotel, will have a value of about 500 million pounds once converted and the homes may sell for more than 3,000 pounds a square foot, Chief Executive Officer Chris Grigg said on a call with reporters.
There are “attractive” opportunities to make further acquisitions and the company plans to continue selling assets to raise cash for purchases, Grigg said.
British Land had “good” results in the quarter ended June 30, Grigg said. While the U.K. economy remains difficult, Grigg said he expects British Land to meet its full-year targets.
Occupancy improved slightly to 98.1 percent, the London-based company said in the statement. Visitors to its shops and malls rose even as the average retail footfall dropped, British Land said.
Commercial leases signed in advance of building completions rose to 85,000 square feet, bringing income from “pre-lets” to 41 million pounds. The U.K.’s Whiteley Shopping Centre, due to open next year, is 76 percent rented. Tenants have been found for 82 percent of the space at the Zaragoza mall in Spain, due to open in October, according to the company.
British Land rose 0.5 percent to 527.5 pence in London trading. The shares have risen about 14 percent this year, compared with the FTSE 350 Real Estate Investment Trust Index’s 16.8 percent gain.