Deutsche Bank’s London Office Changes Hands For £257mil
UNITED KINGDOM – Malaysia-based construction company Gamuda has teamed up with UK private equity firm Castleforge to acquire Winchester House, an office building currently used by Deutsche Bank as its London headquarters, for £257 million (S$419.8 million), according to a report from Bloomberg that was updated on Tuesday evening (28 March, SGT).
However, the commercial property in the London Borough of Wandsworth will soon be vacated by the German bank as its office lease there is poised to expire in April 2024. And Deutsche Bank is slated to relocate to a new headquarters on top of Moorgate in the City of London later this year.
Nonetheless, the acquisition of Winchester House is one of the largest real estate transactions in the City of London for 2023. The new owners also intend to spruce up the commercial property into an eco-friendly office for legal firms, tech companies, and multinational financial institutions.
“Winchester House is a landmark acquisition. We will see this space transformed to trailblaze a new class of amenity rich and sustainable offices in the area,” commented Castleforge Founding Partner Michael Kovacs.
Meanwhile, the new London office where Deutsche Bank will soon relocate into was acquired in March 2022 for £809 million, representing a discount of around 9 percent to its initial valuation. Notably. Still, the commercial property generated £145 million in development profit to the seller, Land Securities Group.
Deutsche Bank inked a 25-year office lease for the 568,500 sq ft property in 2017 and will pay an annual rent of £38 million. However, Land Securities Group has yet to complete the office building due to COVID-19 pandemic as contractors slashed the number of construction workers on site to comply with social distancing rules.
Notably, the commercial property market of the UK has been in flux recently as rising interest rates reduce the spread between government-issued bonds and prime property yields. Nonetheless, new office properties with superb green credentials and long index-linked leases have outperformed other asset classes as investors seek a hedge against runaway inflation.