Malaysia’s EPF carries out 1st London office disposal at hefty premium

Malaysia’s Employees Provident Fund (EPF) has carried out its first office disposal in London since entering the UK market with a £1 bn (€1.4 bn) acquisition programme in 2010.

The pension investor sold One Sheldon Square at Paddington Central in central London to UK REIT British Land for £210 mln (€292 mln), reflecting a net initial yield of 4.5%.

One Sheldon Square was one of EPF's two inaugural buys in London. The property was acquired by EPF in 2010 for £156 mln, a yield of 5.75%, while 40 Portman Square was bought for £181 mln, or a yield of 5.55%.

This week EPF said One Sheldon Square had been sold to British Land following an open tender process.

The property, part of the Paddington Central office, retail and residential complex, is fully let to Visa Europe Services for an annual rent of £9.5 mln, which is reversionary, with a rent review in December 2017.

In a statement, British Land said: ‘Acquiring One Sheldon Square, which is prominently located at the entrance to Paddington Central, allows us to develop a wider vision for the campus as an attractive mixed-use destination.’

EPF has carried out a number of major acquisitions across Europe since the start of 2015, including two London shopping centres in an off-market deal in January for £270 mln and a suburban office complex in Paris for €220 mln. The latter was acquired through asset manager Invesco Real Estate.

The Asian investor was also reported to have teamed up with Invesco to buy a German office portfolio from AEW Europe for €315 mln.

EPF manages a total of €150 bn in assets, with real estate investments in the UK, Germany, France, Australia and Japan.