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Derwent London has completed the acquisition of Francis House, 11 Francis Street, London SW1 for £29.1 million before costs from Property Class England 1, a fund managed by KGAL GmbH & Co. KG.

Francis House is a 57,000 sq ft freehold office building adjoining Derwent London’s existing holdings at Greencoat & Gordon House and 6-8 Greencoat Place. Together, these properties comprise the majority of an island block covering approximately 1.2 acres. Francis House is a former Victorian depositary similar to the group’s existing adjacent holdings, and benefits from generous floor-to-ceiling heights and original warehouse features.

The building is let to Channel Four Television under a lease expiring in February 2020. The total annual income is £1.56 million until February 2015, when there is a fixed rent increase to £1.66 million per annum, reflecting a net initial yield of 5.1%, rising to 5.4%. Part of the ground floor together with the upper floors, which comprise 42,600 sq ft of office space, are let off a low average rent of £36.65 per sq ft (£395 per m2). In addition, there is storage space on the rest of the ground floor and the basement totalling 14,400 sq ft (1,340m2) which is under-let to House of Fraser at a nominal rent until January 2054.

The majority of the space is sub-let and therefore offers a range of asset management opportunities in the medium term. Rents in the Group’s adjoining Greencoat & Gordon House have achieved in excess of £50 per sq ft, underpinning the potential for rental growth.

John Burns, Chief Executive Officer at Derwent London, commented: “This acquisition increases our presence to over 570,000 sq ft in Victoria, an improving West End village which is diversifying from its traditional occupier base and attracting a wide range of creative companies. It will provide us with immediate incremental income, and consolidates our existing holdings within the same block which will increase the longer term options available to us.”