Landsec sells government office building to hotel giant
A Westminster building owned by property giant Landsec, which has played host to major government offices, has been sold to a group bidding to lead Heathrow Airport’s expansion plans.
The sale of Queen Anne’s Mansions, located in SW1, by Landsec marks a major step in the property firm’s ambition to sell off £2bn of its office portfolio by 2030.
The Arora Group, a hotel chain with 13 hotels in transport hubs across London and the South East, snapped up the site for £245m – slightly below the expected book value of the property, which was £256m.
The building was occupied by the Home Office until 2005 and is currently used by the Ministry of Justice.
The office is fully leased until December 2028, meaning the new owners will receive rental income until that time and after that, they will be free to redevelop the building.
The unconditional sale of the site is expected to be completed in early December 2025.
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Landsec described the sale as “immediately accretive” to return on equity.
The deal is set to reduce Lansec’s pro-forma LTV (Loan-to-Value) by 1.3 per cent to 37.1 per cent. This indicates a bolstering of the firm’s financial health with reduced debt relative to assets.
Mark Allan, Chief Executive Officer at Landsec said: “This sale provides strong evidence of the continuing recovery in the central London investment market and allows us to crystallise a full value for this off-strategy asset much sooner than we had envisaged.”
For Arora, the deal provides a significant boost to the group’s capital base as it pursues its “Heathrow West” expansion plan.
The core of Arora’s proposal for the airport is a shorter, 2,800-meter third runway and a new Terminal 6.
The designs respond to the most challenging aspect of Heathrow’s own plan: the need to build over or tunnel under the M25 motorway.
Arora, which has partnered with the global engineering firm Bechtel, claims its approach can be delivered with a lower overall price tag (under £25bn, compared to the airport’s own estimate of up to £49bn) and a faster timeline.