SWITZERLAND/UK - AFIAA, the Swiss real estate investment adviser for state pension funds, has purchased the long leasehold on Schroders' London headquarters for £70m (€76.5m).
AFIAA, the Swiss Foundation for International Real Estate Investments, bought 31 Gresham Street from Hermes Real Estate using equal parts of equity capital and borrowed capital.
Good bank loan terms and the central location, high quality and long-term lease of the 15,000 square metre property mean the property is already generating returns on equity of over 10%, according to fund officials.
"Through Schroders, the new AFIAA property on Gresham Street has a long-term tenant that guarantees stable revenues and thus represents a safe investment and secure returns in the longer term," said AFIAA in a statement.
Schroders occupies the entire building and has a lease that runs until 2015. AFIAA's long leasehold expires in 2196.
Zurich-based AFIAA is made up of tax-exempt pension funds and has a total investment volume of CHF900m (€590m).
The foundation's portfolio includes 27 direct investments in the United States, Canada, Germany, the UK, France, Austria and Spain. AFIAA holds investments in three funds to ensure broad diversification.
AFIAA is subject to the Swiss Federal Law on Employee Pension Funds (BVG) and is supervised by the Federal Office of Social Security (BVS).
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