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Ho Bee Land acquires freehold Grade A London property with £650m investment
PROPERTY group Ho Bee Land announced on Sunday that it has acquired a freehold 21-storey Grade A office building in London, by purchasing its owner Frasia Properties Sàrl for £650 million (approximately S$1.16 billion).
Registered in Luxembourg, Frasia Properties Sàrl owns the property known as Ropemaker Place, a 21-storey Grade A office building comprising approximately 602,000 square feet of commercial space.
Ropemaker Place occupies a substantial freehold island site of about 1.37 acres (about half a hectare) in the City of London, said to be rare in the city core.
It is strategically located to take advantage of the introduction of Crossrail (to be completed and operational in December this year) with Moorgate station less than 200 metres away and Liverpool Street Station, the busiest transport hub in the City of London, 400 metres away.
The property is currently multi-let with a weighted average lease term of 10.5 years to expiry and 8.5 years to break option.
It offers a running yield of approximately 4.68 per cent with an annual rental income of about £30.57 million, with office accommodation accounting for 97.4 per cent. The property will be held for long-term investment.
In a filing, the group said that the combination of a long weighted average income lease term and strong covenants of the tenants will provide Ho Bee Land with a steady and secure income stream. It is also expected to help the group weather the Brexit uncertainty over the next two to three years.
With the acquisition of Ropemaker Place, Ho Bee Land's total investment in London has risen to S$2.4 billion, which constitutes 41 per cent of the group's total investment portfolio.
Chua Thian Poh, chairman and CEO of Ho Bee Land, said: "Despite Brexit, London has proven resilient and maintained its position as the world's top financial city ahead of New York. We remain confident of the long-term prospects of London. The Brexit uncertainty has, in fact, provided us with the opportunity to suss out excellent investment opportunities like Ropemaker Place."
He added that the acquisition allows the group to "substantially grow its robust and sustainable recurrent income base".
The acquisition is financed by internal funds and bank borrowings. It is expected to contribute positively to the consolidated earnings per share and net tangible assets per share of Ho Bee Land group for the financial year ending Dec 31, 2018.
Ho Bee Land's London advisory team in this transaction includes Dentons, Deloitte and Savills.