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An 11.7% stake in 20 Fenchurch Street, better known as ‘The Walkie Talkie’ building has been put up for sale by Morgan Stanley in the hope it will achieve an £150 million sale price, reflecting a yield of 3.1%. Over the last year, yields in central London have dropped dramatically low as the market peaked back towards the end of 2015. Eugene O’Sullivan, a director and chartered surveyor at Morgan Pryce believes “Morgan Stanley may have missed the boat to achieve a yield that low on the sale of their stake, at the start of this year we saw rents drop off in almost every submarket, be that headline rents or the net effective rent. I imagine the decision to sell is linked to capital being withdrawn from its open ended property fund (Special Situations Fund lll) used by Morgan Stanley, institutions and wealthy individuals; so far property funds have seen the highest outflow of cash for 8 years and some funds are having problems with liquidity.”
If Morgan Stanley do achieve £150 million for their 11.7% stake it would mean the Walkie Talkie’s value would stand at £1.3 billion – however it is widely believed the buildings value is closer to £1bn valuing the 11.7% stake closer to £120 million. The building is nearly entirely let producing almost £40 million in revenue in 2015. Top rents in the building have hit the £90 psf mark as rents in tower space grew by 9.7% in the latter part of 2015, according to a major property firm.
Land Securities still retain the major stake in the Walkie Talkie of 50%.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.