£1bn-plus deal frenzy as JPUT tax loophole closes
Buyers rush to complete purchases before chancellor's offshore Budget clampdown
There was a £1bn-plus property deal frenzy this week, as investors tried to finalise transactions before the chancellor of the Exchequer's Budget clampdown on offshore property vehicles.
Hermes teamed up with the Property Merchant Group to acquire bp's former headquarters in the
City of London for more than £160m from Strategic Real Estate Investors.
The pair agreed a surrender with BP of the lease on the building, which was due to expire in 2014. Hermes funded the acquisition of the 200,000 sq ft (18,600 sq m) building on Finsbury Square. Property Merchant Group will carry out its refurbishment. BP is moving to Canary Wharf, where it is taking around 200,000 sq ft (18,600 sq m) in McGraw-Hill's headquarters building at 20 Canada Square.
CB Richard Ellis and Duncan Allison advised Hermes. Duncan Allison also advised StratReal.
A further £700m of deals were completed in the City alone before chancellor Gordon Brown closed the loophole of Stamp Duty exemption for Jersey property unit trusts on Wednesday. The £525m sale of Plantation Place, which was held in a JPUT, by British Land to Insight Investment also completed. Ropemaker Place, also held in a JPUT, was sold by DB Real Estate to British Land for £132m, while 6-7 and 8-9 Harbour Exchange in Docklands were sold by Insight to Land Securities for £80m. Jones Lang LaSalle acted for British Land at Plantation Place and for DB at Ropemaker. Schroders bought 68 Lombard Street from Britannic Asset Management for £22m.King Sturge acted for Schroders; Knight Frank acted for Britannic. Retail investment agents also raced to exchange contracts on Tuesday ahead of the Budget. Boultbee and Protego Real Estate Investors, advised by Lunson Mitchenall and Michael Elliott, completed the purchase of Dunedin's Darwin, Pride Hall and Riverside shopping centres in Shrewsbury for around £115m.
The Budget ended Stamp Duty Land Tax relief on the seeding of unit trusts with property. Unit trusts will now be treated like other collective investment vehicles.
Property week March 2006