Link Asset Management Limited (Link) has agreed to buy The Cabot at London’s Canary Wharf for £380 million (US$487.18 million), its first acquisition in the UK.
The price paid to HGR Liquidating Trust for the 14-storey office building represents a 0.4% discount on the July 17 2020 valuation by Colliers International (Hong Kong) Limited, the manager of Link Real Estate Investment Trust (Link REIT) said in a statement.
The Cabot, where the European headquarters of Morgan Stanley is located, has undergone extensive refurbishment and extension over the six years to March 2020, Link says.
The property offers 481,605 square feet of space and is being acquired with an annual net passing rent of £18.83 million and weighted average lease expiry of 10.9 years.
The transaction offers an equivalent gross yield of 5% based on the property’s net passing income and purchase price.
Link chief executive George Hongchoy says of the acquisition: “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. 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 unitholders. 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.”
Link says it will fund the deal through internal resources as well as new facilities with the intention to fully hedge any foreign exchange fluctuations. Upon completion, Link’s pro-forma adjusted ratio of debt to total assets will rise from 17.8% to 19.2%, based on its consolidated financial position as of March 31 2020.
The transaction is expected to be completed on August 25 2020. Link has tapped Patrizia UK Limited to manage the property.
Link REIT, Asia’s largest REIT in terms of market capitalization, manages a diversified portfolio including retail facilities, car parks and offices spanning Hong Kong, Beijing, Guangzhou, Shanghai, Shenzhen and Sydney.