Continuing the heights of the present property boom in London, Canary Wharf has got its second £1 billion building.
The Citigroup Tower which is located at 25 Canada Square and forms one of the twins behind One Canada Square has been sold to a joint investment between Irish investor, Derek Quinlain and the property company, PropInvest.
The deal will see the current owner, the Royal Bank of Scotland, get the cash in return for selling the 111,852 square meter building that turns over an annual rent of £46.5 million equating to a yield of about 4.6% in a sale negotiated on their behalf by Lazard who dealt with BH2 and CB Richard Ellis.
Only two months ago the HSBC building at 8 Canada Square was sold to Spanish property group, Metrovacesa for £1.1 billion, a substantially higher price tag given it has only 101,000 square metres of space. Combined with the fact HSBC have an inflation-linked rent agreement whereas Citigroup face a convention review in five years, this purchase is by far the better deal.
Quinlain and PropInvest also bid on trying to acquire the HSBC Building and came second but given the relative bargain they've secured for its neighbour, they will be likely pleased they failed.
This isn't the only building in Canary Wharf the Royal Bank of Scotland plan on selling. RBS are also selling the 46,450 square metre 5 Canada Square. Together with 25 Canada Square, they paid out £1.1 billion in December 2003, a spectacularly good deal looking at the prices commanded today by the office market there. RBS and Lazard will no doubt be very happy.
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