UK Investments: Michael Whelan has bought another major investment in the City in London. Jack Fagan reports

Leading housebuilder Michael Whelan has bought a high profile retail and office investment in the City in London for £160 million sterling (€235m). His financial director John Barrett will have a 5 per cent stake in the property.

The deal is easily the most important so far this year in the UK involving Irish investors and brings to £400 million (€570m) the value of property assets now held in Britain by the two businessmen.

A year ago they paid £160 million (€230m) for Victoria House, a 27,870 sq m (300,000 sq ft) office block in London which is partially occupied by the UK's Competition Authority.

The latest purchase, number 70 Gracechurch Street, is producing a rent of £8.95 million (€12.8m), two-thirds of it from the insurance giant XL Capital, which occupies 11,519 sq m (124,000 sq ft) of office space and the remaining one-third from Marks & Spencer, which trades out of 8,361 sq m (90,000 sq ft) on the ground floor. The deal provides an initial gross yield of 5.6 per cent, according to ARCL which advised the purchasers.

The building was bought from aAIM, a privately managed fund in which the investors include the Manchester United manager Alex Ferguson. He said yesterday he was "delighted with the way this investment has performed".

Both leases have about 25 years to run but, interestingly, with the rent set to increase every year on a compound basis by 2 per cent, the roll after 24 years is due to rise to £14.5 million (€20.7m).

The investment was bought in a corporate transaction through the Whelan family holding company, Moritz Holdings. The company is obviously heavily borrowed on the deal but takes the view that it is a good long-term investment that will eventually pay off.

Mr Barrett said yesterday they had a clear long-term strategy to invest part of their assets in the UK market where returns were considerably more attractive and stamp duty rates significantly lower than in Ireland.

Apart from Victoria House and Gracechurch Street, the two investors also own commercial properties in Piccadilly, Mooregate, the City and in Gloucester.

The portfolio also includes Uxbridge Business Park, which was purchased in partnership with Tyrone Allard and Damian Ryan of ARCL Consulting Ltd, a company based in Co Down.

The consortium bought the park from MEPC in March 2003 for £80 million (€114m) and has since sold three buildings in the complex to Irish Life, Canada Life and an Irish investor for £46 million (€65m).

The UK investments are held by Lunar Sea Holdings Ltd, a subsidiary of Moritz Holdings in which Mr Whelan and his family hold a 95 per cent stake. Mr Barrett has the remaining 5 per cent.

Mr Whelan is head of Maplewood Homes in Dublin and owns 180 of the 570 acres of housing land that is due to be developed at Adamstown.