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Goldman in sell-and-leaseback deal for its London office

It will sell the property for £1.16b to Korea's National Pension Service

London

GOLDMAN Sachs Group has agreed to a deal with Korea's National Pension Service (NPS) to sell and lease back its new London headquarters, in a transaction valuing the property at £1.16 billion (S$2.04 billion).

The Wall Street bank will lease back the building for at least two decades, committing the bank to London for the long-term even as Britain's departure from the European Union looms.

The building, which will boast a fitness centre, on-site health services and childcare facilities, will be ready to move into by the middle of next year.

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It is the biggest deal announced for a London office building this year and the second-largest behind last year's sale of the Walkie Talkie tower for £1.28 billion.

Banks including Goldman and Lloyds Banking Group have been agreeing to sale-and-leaseback deals in London as they seek to cash in on demand from Asian investors for property in the UK capital and raise funds to reinvest in their core operations.

Richard Gnodde, vice-chairman of Goldman Sachs and chief executive of Goldman Sachs International, said in a statement: "The development of Plumtree Court and our signing of a long-term lease demonstrates our continued commitment to London and our European operations more broadly."

Goldman developed the building itself and plans to use the space for 8,000 workers to consolidate staff from its current three main London offices.

South Korean investors have been resurgent in London's real estate market this year and the deal marks NPS' first acquisition in the city since its 2009 purchase of Citigroup's Canary Wharf tower.

Investors from South Korea spent £1.1 billion on UK commercial property in the six months through June, more than double the amount in all of last year, and are forecast to spend £4 billion in the year through December, said broker Cushman & Wakefield.

Goldman's new European headquarters "is well-aligned with our defensive strategy and will be an excellent addition to our already strong core portfolio", said Scott Kim, head of global real estate at NPS.

The 10-storey building spans about 826,000 sq ft, the equivalent of almost 13 football fields, and has the flexibility to be occupied by multiple tenants, said Goldman Sachs' statement.

In a tweet last year in October, former chief executive officer Lloyd Blankfein said the bank was still "expecting/hoping to fill it up, but so much outside our control #Brexit". BLOOMBERG