Frasers Centrepoint has made an entry into the UK business park segment with the acquisition of a portfolio of four assets from Los Angeles-based asset management firm Oaktree.
The deal, worth a total of £686 mln (€756 mln), includes four business park and is in line with Frasers’ strategy to grow its overseas presence and recurring income sources.
Earlier this year, the Singaporean investor also signed the €316 mln takeover of Geneba, the owner of German and Dutch logistics and industrial assets, from private equity firm Catalyst Capital.
The portfolio comprises 4.9 million sq ft (455,000 m2) of built area across four freehold business park assets: Winnersh Triangle in Reading, Chineham Park in Basingstoke, Watchmoor Park in Camberley and Hillington Park in Glasgow. It also provides the opportunity to add a further 1.4 million sq ft of space, or roughly 30% of the total.
In addition, its subsidiary Frasers Property said it has also entered into a conditional agreement with the vendor to acquire another business park, Maxis in Bracknell, subject to conditions regarding net operating yield and a minimum occupancy of at least 95%.
Extending the business
Panote Sirivadhanabhakdi, group Chief Executive Officer of Frasers Centrepoint, said that the acquisition is in line with the Group’s strategy to grow overseas presence and recurring income sources. ‘The Group has been in the UK and Europe for over 15 years and we now extend our presence from the residential, hospitality, industrial and logistics sectors to include the commercial and business park sector,’ he added.
Post acquisition, on a pro forma basis, the Group will have around S$4.2 bn (€2.61 bn) of assets in the UK and Europe, with commercial properties representing roughly 30% of the total portfolio.
Sirivadhanabhakdi: ‘We can also potentially benefit from the “network effect”, given that we are already in the industrial, logistics, commercial and business park sectors in Australia, Germany, the Netherlands, Singapore and Thailand.'
The properties are let on long term leases to over 400 tenants with a weighted average lease expiry of 5.9 years. Major occupiers include BMC Software, Ericsson, Harris Systems, Intel, Level 3 Communications and Novartis. The occupancy ratio is currently 85%.
The acquisition will be fully funded through a mix of debt and Frasers' internal resources and will complete within 60 days. Standard Chartered Bank is the financial advisor to Frasers for this acquisition.
Commenting on the rationale for the deal, Sirivadhanabhakdi said that the UK has a highly institutionalised and attractive real estate market with a transparent and efficient legal regulatory and tax framework. 'In particular, the UK business park market has demonstrated resilience and continued growth post the Brexit vote. Favourable supply-demand dynamics, make the UK business park sector a very attractive market to further extend our platform,' he concluded.
