Land Securities Group Plc, the largest U.K. real estate investment trust by market value, agreed to sell offices in London’s South Bank area to an M&G Group Plc unit for 315 million pounds ($502 million).
M&G Real Estate will buy offices at Bankside 2 & 3 as well as stores in Bankside 1, adjacent to the Tate Modern art gallery on the south bank of the River Thames, Land Securities said in a statement today. The buildings include 380,000 square feet (35,303 square meters) of offices leased to Royal Bank of Scotland Group Plc until 2027 and 73,000 square feet of shops.
The development produced strong “returns for us since we started on site in 2003, and selling it now fits our strategy of recycling capital to re-invest,” Scott Parsons, Land Securities’ head of London property, said in the statement.
Land Securities has been selling real estate and investing in developments as London’s economy improves. More than 7.4 million square feet of central London office space was leased in the first nine months of 2013, more than was leased in the whole of 2012, broker Cushman & Wakefield Inc. said in a report last month.
The deal will produce a 5.2 percent net initial yield, according to the statement. Knight Frank LLP advised Land Securities and Jones Lang LaSalle Inc. acted for M&G.