Suntec REIT Makes First Foray into London with £430.6m Acquisition in Victoria

Suntec REIT Nova Building

Suntec REIT has entered into a sale and purchase agreement with Canada Pension Plan Investment Board to acquire a 50 per cent interest in two Grade A office buildings with ancillary retail in the heart of Victoria, West End, London for an agreed value of £430.6 million.

The remaining 50 per cent interest in Nova Properties will continue to be held by Land Securities Group, the developer and asset manager of the Nova Properties.

With the acquisition of Nova Properties, Sunte c REIT’s assets under management will grow from S$10.7 billion to S$11.5 billion across a total of 10 properties in Singapore (77.2% of AUM), Australia (16.1% of AUM), and the United Kingdom (6.7% of AUM).

Office Portfolio weighted average lease expiry will be lengthened to 4.4 years while the Retail Portfolio weighted average lease expiry will be extended to 2.8 years. The acquisition is likely to be funded by GBP and SGD denominated loans.

The acquisition is subject to Unitholders’ approval at an extraordinary general meeting which is expected to be convened in December 2020.

“The Nova Properties are a strategic fit with Suntec REIT’s existing portfolio of high-quality commercial assets in Singapore and Australia. These two premium Grade A office buildings will enhance the resilience, diversification, and quality of Suntec REIT’s portfolio with income contribution from high-quality office tenants and long weighted average lease expiry of 11.1 years,” said Chong Kee Hiong, Chief Executive Officer of the Manager

The net property income yield of 4.6 per cent will provide a DPU accretion of 4.9 per cent upon completion of the acquisition in December 2020. There is also a 2- year guarantee on the retail income which will provide rental protection to ride out the current pandemic,” Chong added.

The Nova Properties are situated in the heart of London. Besides being near to key landmarks such as the Buckingham Palace, Westminster Abbey, and the Houses of Parliament, the buildings are also situated opposite the Victoria Station, an important interchange for the London Underground network and Victoria Coach station.

Victoria Station is also United Kingdom’s second busiest railway station with direct train linkage to Gatwick Airport. Completed in 2016 and 2017, the Nova Properties is the newest large scale addition to the West End. Constructed to the highest standards, it has a total net lettable area of approximately 559,000 sq ft and a long leasehold tenure of 1,042 years. –