UK - The British Airways Pension Fund has entered into a 50/50 joint venture with the Columbus UK Real Estate Fund to acquire London City office Austin Friars House for £25m (€30.6m).
The transaction reflected a yield of 7% and follows a number of acquisitions by the pension fund this year in the UK industrial and retail sectors.
Paul Scott, head of property at British Airways Pension Investment Management, said: "We have historically avoided the City office sector due to its past volatility, but this particular opportunity looks to be well positioned for the current cycle.
"Furthermore, we are investing alongside Columbus Capital Management, who we have worked with before and have a good track record in this market."
Columbus Capital Management, a subsidiary of Schroders' real estate investment and asset management business, are the investment advisers of the Columbus UK Real Estate fund, a UK value-added vehicle launched earlier this year.
Joe Froud, managing partner at Columbus Capital Management, said: "We expect City office rents to recover strongly over the next 24 months due to a lack of new supply, and the existing leasing structure lends itself to this cycle timing.
"The building is typical of the type of asset we target - in a good location, between Tower 42 and the Bank of England, and well configured, but in need of physical improvement."
Austin Friars House was constructed in 1989 behind a retained facade and extends to 58,600 square feet.
It is let to eight tenants, and the majority of leases have rent reviews and break options or lease expiries in late 2012.
The Austin Friars House deal follows two recent industrial acquisitions by the BA Pension Fund in conjunction with Evander Properties: Matrix business park in Chorley, Lancashire for £6.8m, and the Qubit 3 industrial development site in Northampton for £6.6m.
In May, the pension scheme acquired Bridgend Retail Park in Wales for £18.9m.
The BA pension fund had 4.8% of its assets, or £287.6m, invested to real estate as at March 2009, just short of its strategic target allocation of 5%.