Asia’s largest REIT, Link Asset Management, has acquired an office in the financial district of Canary Wharf in London, in what is said to be the biggest property deal in the UK capital so far this year.
Link has paid £380 mln (€415.6 mln) for the asset, achieving an equivalent gross yield of 5%. The vendor in the deal was Hines.
Comprising 481,605 square feet (44,742 m2) across 17 floors, 25 Cabot Square has an annual net passing rent of £18.83 mln (€20.6 mln) and a weighted average lease expiry of 10.9 years. It has undergone extensive refurbishment and extension in the past six years.
The price Link paid represents a 0.4% discount on a valuation by Colliers International, earlier this month.
Link’s chief executive officer, George Hongchoy, said: ‘The Cabot is exactly the kind of stable income-producing high-quality asset with long-term growth potential that we’re looking for. It’s a prominent, Grade A building and one of the few freehold properties in Canary Wharf.
‘It’s well located with excellent connectivity and accessibility and it is almost fully occupied with long leases to high quality tenants.[Note 1] The transaction will immediately be earnings accretive to Link.
‘Today’s acquisition is part of our Vision 2025 growth strategy to diversify and improve portfolio mix, enhancing our ability to deliver sustainable returns for unit holders. A diversified portfolio can strengthen our portfolio resilience, allowing us to benefit from the varied economic cycles of different markets.
‘Going beyond our home Hong Kong and Mainland China, we’re looking at opportunities in the UK, Singapore, Australia and Japan – transparent and liquid markets with sound legal frameworks and strong economic fundamentals.’
Commenting on the deal, Martin Lay, head of city investment at Cushman & Wakefield - which advised Hines in the transaction - said: 'The sale of 25 Cabot Square is the largest deal to have taken place in London this year and demonstrates the green shoots of activity we are seeing in the office market following the Covid-19 lockdown. This landmark deal confirms the enduring appeal of London office assets and the UK as a key destination for overseas investment.'
Patrizia advised Link in the acquisition. Jamie Younger, head of transactions, UK and Ireland, said: 'We are very pleased to work with Link on their debut transaction in the UK, highlighting our ability to execute transactions during this current time of uncertainty. Given our unparalleled local knowledge and a strong track record in Europe, we are open to further work on similar projects for a range of potential global institutional clients.'
