Hammerson has achieved a net initial yield of 4.5% on the sale of an office building in London’s St James’s, SW1

It has sold its long-leasehold interest in 83-85 Pall Mall to a UK pension fund client of Orchard Street Investment Management, believed to be Railpen, for £36.7m.

The building, which Hammerson owned on a long lease from the Crown Estate, comprises 47,362 sq ft (4,400 sq m) of offices. They are fully let to several financial tenants at an annual rent of £1.4m, which equates to £29.56/sq ft (£318.18/sq m).

Chris Bartram, chairman of Orchard Street, said the purchase had ‘significant reversionary potential’ with an equivalent yield of more than 5.25%.

Hammerson chief executive John Richards said: ‘This is in line with Hammerson’s policy of recycling capital. The company plans to reinvest the proceeds in assets offering greater potential for asset management and development.’