Singapore’s GIC Buying Stake In London’s Paddington Central Office Complex For $885 Million

Singaporean sovereign wealth fund GIC has agreed to buy a 75% stake in British Land’s Paddington Central office complex in London for 694 million pounds ($885 million), adding to signs of growing Asian investor appetite for real estate assets in the European financial hub.

The transaction, which is expected to be completed within three months, comprises four existing office buildings on Kingdom Street and Sheldon Square as well as a development site, British Land said in a statement on Monday. The property will be held by a new joint venture company, which will be owned 75% by GIC and 25% by British Land, a real estate investment trust listed on the London bourse.

“We are pleased to invest in Paddington Central, a high-quality office-led mixed-use campus with retail and leisure uses,” Lee Kok Sun, chief investment officer of real estate for Singapore-based GIC, said. “It is very well-located with connectivity to national rail services and key transport links to Heathrow, West London and Oxford. Our earlier investment in Broadgate has demonstrated the high value of acquiring central London campuses and we are confident that this asset will generate resilient long-term returns.”

GIC and British Land had equally-owned the 13-story office building on 5 Broadgate until mid-2018 when it was sold to billionaire Li Ka-shing’s CK Asset for 1 billion pounds. Last month, CK Asset sold the property, which serves as the London headquarters of UBS, to South Korea’s National Pension Service for 1.2 billion pounds.

“We are delighted to be partnering with GIC again and this second joint venture with them demonstrates the success of our relationship at Broadgate as well as the quality of the assets and the opportunity at Paddington Central,” British Land CEO Simon Carter said.

Through the joint venture, British Land said it will continue to be the asset manager of Paddington Central, which has delivered a total property return of 9% per annum since 2013. While British Land’s 206-room Novotel Hotel on 3 Kingdom Street and the development site at 5 Kingdom Street is not part of this latest partnership, GIC has the option to acquire stakes in both assets, it added.

Singaporean investors have been snapping up prime office properties in London. In February, Ho Bee Land—controlled by billionaire Chua Thian Poh—agreed to buy The Scalpel office tower in London’s financial district for 718 million pounds.

“We are seeing returning demand in the take-up of new office spaces that are of high quality and in prime locations,” Tracy Stroh, regional head of European real estate at GIC said.