China Vanke Sells London Office Building to M&G for $178M

China Vanke has sold its Ryder Court office building in London’s posh West End for £132 million ($178.2 million) to M&G Real Estate, chalking up a modest gain on the disposal after holding the Grade A asset for five and a half years.

M&G acquired the five-storey block in St James’s district on behalf of an Asian separate account mandate and will revamp the property, the UK-based fund manager said Wednesday in a release. For the building’s 70,000 square feet (6,503 square metres) of gross floor area, M&G paid roughly £1,886 ($2,546) per square foot.

Vanke had bought Ryder Court from Henderson Global Investors in 2016 for £115 million ($154 million), marking the Shenzhen-based developer’s first office building in Britain. The group will recognise an unaudited gain before taxation of about £4 million from the sale, according to a filing with the Hong Kong stock exchange.

“Opportunities to acquire prime assets such as Ryder Court in prestigious submarkets like St James’s are rare,” said Paul Crosbie, who leads M&G’s UK value-add initiatives. “Whilst the rise of homeworking has clearly accelerated, demand for quality offices in prime locations is holding up well.”

Sustainability Update

Situated at the corner of Ryder and Bury streets, within a five-minute walk of the Green Park subway station, Ryder Court is multi-let to various tenants in the financial and hospitality industries, said London-listed M&G, which had more than £370 billion in assets under management as of last June.

As part of a modernisation programme for the structure, M&G will invest additional capital to upgrade the reception area, introduce cycle storage and provide shower facilities, as well as overhaul the central plant facility and provide a rooftop terrace to promote health and well-being and create an entire new floor of workspace.

“The focus on sustainability from occupiers and investors alike has led to a rise in demand for ‘green’ assets which are commanding premium rents and pricing and a number of ‘green buildings’ have already been certified in London and other major cities,” said fund manager TeckLeong Kee of M&G Real Estate Asia. “We continue to invest to future-proof our assets for our tenants.”

James McCluskey, a Knight Frank partner and member of the London capital markets team, pointed to “a significant weight of capital” for commercial real estate in the city centre.

“Strong demand and forecast rental growth across all the London submarkets is providing vendors with the opportunity to take profits on assets acquired in the last few years,” McCluskey told Mingtiandi.

Leaving the West End

China Vanke, the third-largest mainland developer by contracted sales, expects £56 million in net proceeds from the Ryder Court disposal. The group plans to use part of the proceeds to satisfy the consideration for a residential development plot acquired by Vanke in Hong Kong’s Sham Shui Po area.

Ryder Court was only the second investment in London for Vanke after spending £30 million ($46.4 million) in 2015 to acquire a stake of just over 20 percent in The Stage, a mixed-use project developed by a joint venture with Cain Hoy, McCourt Global, Investec Structured Property Finance and Galliard Homes in the Shoreditch area.

Henderson Global Investors, which merged with US-based Janus Capital Group to form Janus Henderson in 2017, had purchased Ryder Court from LaSalle Investment Management for £82 million ($109.9 million) in 2013.

Henderson froze its open-ended UK property fund after Britain’s June 2016 vote in favour of leaving the EU, Reuters reported. The firm sold Ryder Court to Vanke a few months later.