Capco and Land Sec close £117m property deal

Capital & Counties Properties has acquired full control of the Empress State Building in West London, which could be in line for conversion from commercial to residential status.

Capco paid £117m to Land Securities Group to purchase the remaining 50% of the building it didn't already own.

Capco will make the payment in cash and the assumption of Land Securities' share of the existing £131m debt facility, which will remain in place until maturity in August 2013 and the company reported it was already negotiating a new five year debt facility.

The 31-story Empress State Building, which is fully let to the Mayor's Office for Policing and Crime until June 2019, generates a current rent passing of £14.9m.

The purchase price represents an initial rental yield of 6.2% and an equivalent yield of 6%.

Capco said that, in the medium-term, opportunities to extend or review the existing lease will be considered or the property could be suitable for conversion to residential status in line with the plans for the Earls Court redevelopment masterplan.

Gary Yardley, Capco's Investment Director, said: "The Empress State Building provides an attractive income stream until 2019 whilst offering a number of options to create further value over the medium-term as the area benefits from the implementation of the Earls Court Masterplan."

Land Securities' London Head of Property Scott Parsons added: "The sale of the Empress State Building fits our strategy of recycling capital through disposals where we do not see an opportunity for full control of the asset management or development of the site."

Shares in Capital & Counties Properties were up 0.2% at 331.5p and those in Land Securities were up 0.2% at 947.5p at 08:25 on Thursday.

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