Link Asset Management Limited (Link) has agreed to buy The Cabot in London’s Canary Wharf for £ 380 million ($ 487.18 million), the UK’s first acquisition.
The price paid to HGR Liquidating Trust for the 14-story office building represents a 0.4% discount on the July 17, 2020 valuation by Colliers International (Hong Kong) Limited, said the manager of Link Real Estate Investment Trust (Link REIT) in a statement.
The Cabot, which houses Morgan Stanley’s European headquarters, underwent a major renovation and expansion in the six years leading up to March 2020, Link says.
The property covers 481,605 square feet and is purchased with a net annual through rent of £ 18.83 million and a weighted average lease term of 10.9 years.
The transaction offers an equivalent gross return of 5% based on the net transitional income and the purchase price of the property.
Commenting on the acquisition, Link CEO George Hongchoy said, “The Cabot is exactly the kind of stable, high-yielding, high-quality asset with long-term growth potential that we are looking for. It’s a prominent Grade A building and one of the few condos in Canary Wharf. It is in a good location with excellent connections and accessibility and is almost fully let to high-quality tenants with long leases. The transaction will be profitable for Link immediately. “
“Today’s acquisition is part of our Vision 2025 growth strategy to diversify and improve the portfolio mix, thereby enhancing our ability to generate sustainable returns for shareholders. A diversified portfolio can strengthen our portfolio resilience so that we can benefit from the different business cycles of different markets. Beyond our home in Hong Kong and mainland China, we are looking for opportunities in Great Britain, Singapore, Australia and Japan – transparent and liquid markets with solid legal frameworks and strong economic fundamentals. “
Link says it will fund the deal through in-house resources as well as new facilities to fully hedge any exchange rate fluctuations. Upon completion, Link’s adjusted pro forma debt to total assets ratio will increase from 17.8% to 19.2% based on the consolidated financial position as of March 31, 2020.
The transaction is expected to close on August 25, 2020. Link has hired Patrizia UK Limited to manage the property.
Link REIT, Asia’s largest REIT by market capitalization, manages a diversified portfolio with retail facilities, parking garages and offices in Hong Kong, Beijing, Guangzhou, Shanghai, Shenzhen and Sydney.