Singaporean sovereign wealth fund GIC has taken a 75% stake in Paddington Central, a collection of assets owned and developed by British Land, for £694 mln (€824 mln).
The transaction establishes a new joint venture with ownership split 75:25 for GIC and British Land respectively. The total consideration of £694 mln is 1% below September 2021 book value, according to British Land, and represents a net initial yield of 4.5%.
Simon Carter, CEO British Land said: 'We are delighted to be partnering with GIC again and this second joint venture with them demonstrates the success of our relationship at Broadgate as well as the quality of the assets and the opportunity at Paddington Central.
'Paddington has been an excellent investment for British Land and this transaction is a great illustration of our strategy in action. Since acquiring Paddington Central in 2013, we have driven significant value through asset management and development across the campus.
'We are pleased to enter into this innovative JV structure so that we can continue to play a meaningful role in the development of the campus whilst also releasing capital to invest in other value accretive opportunities across our business.'
British Land said that proceeds would be invested into value accretive development opportunities, including development-led urban logistics in London and innovation campuses.
The UK firm will continue to act as asset manager for the campus and development manager for future opportunities including 5 Kingdom Street.
Lee Kok Sun, CIO of real estate, GIC, said: 'We are pleased to invest in Paddington Central, a high-quality office-led mixed-use campus with retail and leisure uses.
'It is very well-located with connectivity to national rail services and key transport links to Heathrow, West London and Oxford. Our earlier investment in Broadgate has demonstrated the high value of acquiring central London campuses and we are confident that this asset will generate resilient long-term returns.'
Tracy Stroh, region head of Europe, real estate, GIC, added: 'We are seeing returning demand in the take-up of new office spaces that are of high quality and in prime locations.
'We are pleased to partner with British Land again and look forward to leveraging their best-in-class capabilities to drive value across Paddington Central. We believe this investment will be a good addition to our Europe portfolio.'
Paddington Central was acquired in 2013 for £470 mln, at the time comprising three buildings, a retail and leisure cluster and two development sites. In 2015 British Land completed the acquisition of 1 Sheldon Square for £210 mln and in 2017 completed the development of 4 Kingdom Street. The campus has delivered an average total property return of 9% per annum since acquisition.
The jv will initially comprise 2 and 4 Kingdom Street, 1 and 3 Sheldon Square (including the retail and leisure element), the Gateway development site and surrounding moorings.
In the future, GIC will be granted options to acquire further elements under development, such as the Novotel at 3 Kingdom Street and 50% of the development site at 5 Kingdom Street.
CBRE and UBS advised the seller.
