04 May 2010

Climate Change Property Fund makes City of London purchase

Climate Change Capital (CCC) has completed the acquisition of the freehold 77 Gracechurch Street, London, EC3 for £35,900,000 from Greenhills Real Estate, reflecting a net initial yield of 6.5%. This is Climate Change Capital Property Fund's (CCPF) third purchase to date which takes their investment in the UK market to over £90 million.

The property is superbly located in City Core, a short distance from the Bank of England. It is surrounded by excellent public transport links and is situated within one of two main retail locations, including Leadenhall Market. The building was a 1985 Land Securities redevelopment substantially refurbished by Greenhills Real Estate in 2008 to an Energy Performance Certificate (EPC) "B" which is outstanding for a refurbished building.

Greenhills Real Estate focus on energy efficiency at this building demonstrates the value of retrofitting buildings to adapt and/or mitigate to the risks/opportunities of the low carbon economy.

Tim Mockett, Founder Partner, said: "The exemplar standard of this refurbishment has produced a premium quality office that will perform well and is set to benefit from the anticipated growth in the City going forward, fitting perfectly with our strategy. Throughout our ownership we will seek to further improve the EPC and wider BREEAM rating through our low carbon focussed asset management, working with the occupiers to achieve improved energy efficiency and reduced operating costs."

Esme Lowe, Joint Founder Partner, said: "This investment takes the fund to approximately 70% invested and demonstrates our ability to deploy equity on a stock selective and risk adjusted basis."

Stephen Jobburn, CEO of Greenhills Real Estate said: "Our strategy to reposition this building to both an institutional quality and to meet exacting energy standards proved very successful in appealing to both occupiers and institutional investors. Following refurbishment in 2008 we were able to re-let all 35,000 sq ft of office space within 8 months at a headline rent of £53 per square foot (psf), in what were very challenging circumstances."

"We also implemented a comprehensive retail strategy, securing a change of use and bringing in Loch Fyne on a new 25 year lease and restructuring with Monsoon, Barbour and Fullers achieving a new overall rent of £191 psf in terms of Zone A, London (ITZA) for Gracechurch Street. Our business plan for this asset is complete and securing a disposal to Climate Change Capital at this stage allows us to focus our repositioning skills on several other major assets within our portfolio."

"Even in these challenging economic circumstances it is important not to lose sight of the whole energy
efficiency issue. Our corporate strategy has and remains focused on repositioning assets to meet the highest energy standards, which in turn has a direct and significant cost saving to the occupier. We believe this will ultimately flow through to both rental levels and investment yields", he added.

Jones Lang LaSalle acted on behalf of Climate Change Capital. Strutt and Parker for Greenhills Real Estate

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