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U.S. private equity giant Lone Star has bought a 107K SF office building from Derwent London for £110M as funds looking for high returns take advantage of a disconnect between rental growth and asset prices.
Yields for central London offices dropped sharply in 2025, accompanied by a rise in investment activity driven by private equity firms and hedge funds.
Lone Star has bought 90 Whitfield St. in the Fitzrovia area of the West End from Derwent. The building comprises 99K SF of offices and 8K SF of retail. It was completed in 2007.
The office element of the building is 87% leased, according to Derwent. It generates rent of £6M a year and has a relatively short weighted average lease term of 3.7 years. The price reflects a capital value of £1,100 per SF and a 5% net initial yield.
That WALT is part of the appeal to Lone Star — it can drive up rents.
“We believe that there are significant opportunities to further enhance the rental tone and institutional desirability by deploying further capital into refurbishment and sustainability upgrades,” Lone Star said.
It bought the building for its seventh opportunity fund, which raised $2.7B in 2025.
Lone Star joins opportunity funds and hedge funds SVP, Hayfin and Ares Management in their willingness to spend big in the London office market, betting that limited new development will push up rents in existing buildings.
Hayfin undertook one of the largest deals this cycle, buying the 300K SF Can of Ham in the City for £340M in September.
Among the few core or core-plus buyers in the market are Aware Super, through its joint venture with Delancey, and Royal London Asset Management.
The uptick of interest in London offices caused average yields to fall 130 basis points to 5.9% in 2025, CoStar data showed. That is the lowest level since 2023.
In contrast, regional office yields rose 70 basis points to average 10.5%, the highest they have been since 2013.
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