Insurance giant snaps up office scheme in £211m deal
Insurance giant Legal & General has bought a government-let Leeds office scheme for £211m in what is believed to be the biggest-ever office investment deal in the city.
Legal & General Retirement will forward-fund the 377,730 sq ft project at 7-8 Wellington Place, which is being developed by Oxfordshire-based MEPC.
Legal & General have purchased the building from Hermes Investment Management and Canada Pension Plan Investment Board, who still own the rest of the wider Wellington Place estate. Once completed, the wider scheme will total 1.5m sq ft of commercial, retail, leisure and residential space.
7-8 Wellington Place is let to HMRC and NHS Digital. The asset includes two office buildings, basement car parking and associated retail and leisure facilities.
The latest deal is L&G’s tenth government hub in the centre of Leeds. Over the past three years, L&G has invested over £1.5bn into developing government hubs in cities across the UK.
The buildings are part of Wellington Place, a sustainable business community being built in the heart of Leeds by developer and manager, MEPC. Once completed, the scheme will boast a total of 1.5 million sq. ft. of commercial, retail, leisure and residential space and be one of the biggest and most prestigious new city centre business quarters in Europe.
Henrie Westlake, head of investment at the Leeds office of global property consultancy Knight Frank, who advised Legal & General, commented: “ L&G has directly invested around £1.1 billion into Leeds in recent years through major urban regeneration projects and the delivery of housing, social care and infrastructure.
“Other key investments include the redevelopment of Headingley Cricket Stadium; Mustard Wharf, a city centre Build To Rent scheme; and the mixed-use Thorpe Park Leeds scheme, which includes the construction of the first section of the East Leeds Orbital Road, a key piece of road infrastructure for the city.
Westlake added: “Despite being one of the UK’s major financial and business service hubs, Leeds has an extremely low supply of Grade A office space. With the city benefitting from the largest growing workforce outside London, this development will help to meet this growing demand by providing much-needed top quality office space to the region.”
Upon completion, Wellington Place is expected to accommodate 12,000 people living and working within the development.
Gordon Aitchison, Director of Investment and Development at LGIM Real Assets said: “Representing Legal & General’s 10th Government Hub, these investments are a perfect match for our UK pension commitments, providing high-quality long-term investments while also aiding vital regional regeneration. As the second largest financial hub outside of London, with a strong and growing work force, our investment in Leeds will have a meaningful impact on the region, providing quality office space and creating tens of thousands of jobs.”
Chris Taylor, Head of Private Markets at Hermes Investment Management added: “This deal is a testament to the significant success that has been achieved in establishing a sustainable investment community at Wellington Place in Leeds through our joint venture investment and with MEPC as our development manager partner. It will enable us to capitalise on this holistic approach to urban regeneration predicated upon great placemaking, by releasing funds for more development on site, overseen by MEPC.”
James Dipple, CEO of MEPC added: “MEPC will complete the development of 7 and 8 Wellington Place with occupation scheduled for later this year. The buildings will be at the heart of the community at Wellington Place. We look forward to working with the new investors and tenants to ensure that Wellington Place continues to meet the needs of the people who work here and demand for high quality buildings within the wider City Region.”
Knight Frank and Lewis Ellis advised Legal & General.