Derwent snaps up new property in south west London

published 11 July 2012

Derwent London, a FTSE 250 property firm, has acquired Francis House, a freehold office building in south west London covering 57,000 square feet.

The £29.1m property adjoins the company's existing holdings at Greencoat & Gordon House and 6-8 Greencoat Place.

The building is let to Channel Four Television under a lease expiring in February 2020. The total annual income is £1.56m until February 2015, when there is a fixed rent increase to £1.66m per annum, reflecting a net initial yield of 5.1%, rising to 5.4%.

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Part of the ground floor together with the upper floors, which comprise 42,600 square feet (sq ft), equivalent to 3,960 square metres, of office space, are let off a low average rent of £36.65 per sq ft.

In addition, there is storage space on the rest of the ground floor and the basement totalling 14,400 sq ft (1,340m2) which is under-let to House of Fraser at a nominal rent until January 2054.

John Burns, Chief Executive Officer at Derwent London, said: "This acquisition increases our presence to over 570,000 sq ft in Victoria, an improving West End village which is diversifying from its traditional occupier base and attracting a wide range of creative companies. It will provide us with immediate incremental income, and consolidates our existing holdings within the same block which will increase the longer term options available to us."

The firm was also keen to point out that rents in the adjoining Greencoat & Gordon House have achieved in excess of £50 per sq ft, pointing to the potential for rental growth.

The share price fell 0.11% to 1,887p by 08:16.