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Hines purchases New Bond Street block from Aviva

Hines has acquired a flagship mixed-use retail and office scheme in the heart of London’s West End on behalf of the Hines European Value Fund 2 (HEVF 2). This is the second landmark acquisition Hines has secured on the internationally famous street with the highest footfall in Europe. Furthermore, the investment manager has acquired on behalf of the fund a 31,000-square-metre multi-family rental residential scheme in Madrid and - as announced - two office buildings located in Munich [we reported].

Hines buys New Bond Street Block
Hines has acquired the home of fashion retailer Next from Aviva Investors for around £130m. The 37,414-square-foot building arranged over lower ground, ground and five upper floors is uniquely positioned with dual frontage on to both New Bond Street and Oxford Street (80 New Bond Street & 327-329 Oxford Street), making it one of the most desirable micro-locations and sought-after properties in central London.

The building is currently multi-let to four tenants with vacancy available as of August 2020. Hines will embark on a comprehensive reconfiguration and refurbishment to enhance and reposition the asset as flexible, best-in-class, prime retail space on the lower floors, with prime grade A office space above.

Gary Sherwin, Head of UK Transactions, Aviva Investors, said: “The fund in which the property is held is increasing its allocations into assets with secure income streams, including pre-let office and hotel investments in Cambridge and Manchester, which are key locations in our real estate investment strategy. We continue to have appetite for prime retail assets in cities with strong economic fundamentals, including those that are attractive tourist and leisure destinations. However, we will sell properties when we can achieve an attractive return for our clients and believe the proceeds can be better redeployed elsewhere, including our strong pipeline of office development opportunities in London. The sale of this asset met our objectives through a competitive bidding process.”

This is the second landmark acquisition Hines has secured on the internationally famous street with the highest footfall in Europe. The property is located just 130 metres east of 354-358 Oxford Street, above the Bond Street Underground station, which the firm acquired in late 2018 on behalf of the Hines European Value Fund 1, and has rebranded as Oxbourne House. Hines is transforming that asset into a premier flagship retail store with high quality residential accommodation comprising 11 units across the upper floors.

Jake Walsh, Director, Hines UK, said: “Oxford Street and Bond Street are amongst the world’s most iconic and popular retail streets. With the eagerly anticipated adjacent Hanover Square Development completing later this year and the delivery of Crossrail on the way, this location is positioned to capitalize well on localized trends, and will be a unique shop window for any global brand in an unparalleled location.”

This latest acquisition is the third for HEVF 2, bringing the amount of equity allocated by the fund to €300 million. At the beginning of the month the investment manager announced the forward purchase of a 31,000-square-metre multi-family rental residential scheme in Madrid from Acciona.

Sign of a forward purchase agreement in Madrid
Located in one of Madrid’s fastest growing residential districts in the northeast of the city, the agreement to acquire the completed Valdebebas 125 scheme was agreed and signed off-market through the Hines local team in Spain from Acciona, listed on the Ibex 35 Spanish Stock Exchange.

The both partners worked closely together on the scheme design and specifications before signing the forward purchase agreement. Acciona will now develop and deliver the high-quality scheme, which is expected to be completed in 2022. The project has been designed to obtain the highest environment certifications and Hines is committed to ensuring that the scheme will set a new benchmark for purpose-built rental residential real estate in Madrid.

Incorporating around 395 apartments of varying sizes for individuals, couples and families, Valdebebas 125 is located close to the train station and facing the new Valdebebas Central Park. It will provide a home for around 900 people. The community will also include 7,600 square metres of landscaped spaces with private leisure amenities, together with a supermarket, convenience retail and restaurants that will service the entire Valdebebas area.

Office acquisition near Munich
In addition, Hines announced this week the purchase of two office buildings located in Neuperlach [we reported]. Located next to Einkaufs-Center Neuperlach (PEP), Munich’s largest shopping mall, and with exceptional public transport links, the two office buildings comprise over 87,000 square metres of office space on Fritz-Schäffer-Straße 9. The „Fritz9“ is currently fully let to Allianz.

Paul White, HEVF 2 fund manager, said: “We are delighted to have made a significant investment for HEVF 2 into the Munich office sector, a market we have been actively targeting for some time. Munich benefits from some of the strongest office fundamentals in Europe today, with demand also exceeding available volume and quality of space in the residential sector."

HEVF 2 was launched in September 2019 following full investment of commitments in Hines European Value Fund (HEVF 1), a core plus/value-add fund for which Hines raised €721 million of equity commitments in closings from July 2017 to August 2018, exceeding the original fund target size by over 40%. In January, Hines announced the first closing of the fund, securing €637m of equity commitments in just three months after its launch, exceeding 50% of the final €1.25 billion fund raising target. When factoring leverage, HEVF 2 is expected to have total purchasing power approaching €3 billion, making it Hines’s largest closed-ended fund in Europe to date.
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