Sinarmas buys London office building for £259m

Singapore

SINARMAS Land is strengthening its portfolio of investment properties in London with its acquisition of a freehold prime commercial building for £258.7 million (S$551.3 million).

It is buying Alphabeta Building from institutional investor Resolution Property - its third such commercial property purchase in London, following its acquisition of New Brook Buildings in May 2013 and Warwick House in September 2014. (It sold New Brook last December.)

The price, reflecting a valuation of £280 million for the property, is less than the valuation because it includes liabilities from the investment vehicle holding the property.

The completely refurbished Alphabeta Building has a net leasable area of 243,850 sq ft spread over nine levels of Grade A office space from the lower-ground (that is, basement) to the eighth floor.

The building is located in eastern London, near the Shoreditch area, which is known for its creative and commercial innovation.

It is fully leased, and tenants include asset manager SEI, restaurant reservation service Open Table and Barry's Bootcamp.

All leases are operating on "triple net lease" agreements - meaning the tenants are responsible for all costs, including real estate taxes, building insurance and common area maintenance. In return, Sinarmas receives a net rental from the tenant with a weighted average lease expiry of 13 years.

To the south of the building is Finsbury Square, which links it to London's Central Business District; to the north, the building sits on Worship Street, with its developing quarter of shops, workplaces and restaurants.

The deal is expected to be completed in September 2015. The group plans to use internal sources of funds and external bank borrowings to finance the acquisition.

Sinarmas Land, which derives income streams principally from Indonesia, is a unit of the Indonesian Widjaja family's Sinar Mas conglomerate.

Its counter ended at S$0.605, up a cent on Tuesday.