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Derwent London has exchanged contracts on the sale of its freehold interest at 13-17 Fitzroy Street, London W1 to a member of the Arup group of companies (“Arup”) for £60 million, which reflects a net initial yield of 7%. The sale price represents a decrease of 10% from the 31 December 2008 valuation, which compares to the IPD UK Monthly Property Index for West End & Midtown offices which showed a decline of 14.8% for the first six months of 2009.

The property is fully let to Arup on a lease expiring 2023 at a rent of £4.46 million per annum, subject to five-yearly upward only rent reviews. Prominently located on the corner of Fitzroy and Howland Street, the eight storey office building totals 90,420 sq ft (8,400 sq m). The property underwent a comprehensive redevelopment which completed in 2003 as the first of a three phase scheme to provide Arup’s new global headquarters. Following the sale of Phase I Derwent London will retain the ownership of Phases II and III, with Arup occupying the remaining 147,700 sq ft in its entirety.

John Burns, Chief Executive of Derwent London said: “We are pleased to have agreed this significant sale which forms part of our programme to recycle capital. Arup is an important tenant on our Fitzrovia Estate with whom we have a long standing relationship. We are committed to the strategic regeneration of the Fitzrovia area, where our ownership extends to over one million sq ft and where we look forward to continuing to work closely with Arup.”