British Land has sold off half of its stake in one of London’s most notable office buildings six months after its famous former tenant upped and left.
Announced today, asset manager Royal London will take a 50 per cent stake in the Euston-based 1 Triton Square project for £192.5m, creating a joint venture with British Land.
This sum is in addition to the £149m surrender premium already received from Facebook-owner Meta, which exited its contract in September last year in the latest sign of large corporates cutting back on workspace amid the post-pandemic boom in hybrid working.
The project will see the site, valued at £385m at the closing of the deal, turned into a hybrid science and technology facility with labs and various types of serviced office space throughout.
British Land said the move “delivers against one of its key strategic priorities to actively recycle capital, with proceeds being reinvested into future developments,” and affirmed that the partnership would “accelerate and enhance” returns.
The 370,000 sq ft 1 Triton Square building is located in the heart of the Regent’s Place campus within London’s so-called ‘Knowledge Quarter’, home to leading research institutions including The Francis Crick Institute, The Wellcome Trust, The Alan Turing Institute and University College London.
The combined impact of the surrender premium, joint venture (JV) formation and subsequent fit-out and leasing is expected to deliver more than a 30 per cent internal rate of return.
Simon Carter, chief executive of British Land, said: “We are delighted to be working with Royal London Asset Management to deliver a world class science and innovation building at Regent’s Place.
We proactively took 1 Triton Square back from Meta to reposition it for science and innovation customers, with the expectation of unlocking significantly higher rents, whilst benefitting from a considerable surrender premium to further improve the economics.
This transaction is another example of how we drive value through establishing innovative JV partnerships, enabling us to flex our balance sheet, share the risk and crystallise the value created from Meta’s surrender premium.”
Mark Evans, head of property and commercial development at Royal London Asset Management Property, added: “We have long recognised the demand for best-in-class science and innovation space, particularly in the Golden Triangle, and the need for this space in supporting the UK’s economic growth.
“1 Triton Square will increase our holdings to over 2.0m sq ft and will form a core part of our wider portfolio as we position life sciences and innovation as a core platform for further investment.”