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Metro Holdings Limited has entered into a joint venture with Lee Kim Tah Group to acquire an office property in London for £80.75 million (S$149 million), including stamp duty and other expenses.
The 50:50 JV has agreed to purchase the property from Lavariano Asset Holdings Limited and Lime Leaf Asset Holdings Limited.
The property is a freehold office building with 84,836 sq ft of office as well as ancillary facilities arranged over basement, lower ground, ground and five upper floors.
It is currently fully leased until 2023, producing a current annual rental income of around £4.0 million (S$7 million) per annum, or a low average rent of £47.15 psf (S$87 psf).
In an SGX filing, Metro Holdings noted that the current annual rent reflects an initial gross yield of 4.95 percent.
“The investment represents an excellent proposition to acquire a freehold property in one of London’s leading occupational sub-markets with the future ability to enhance returns via multiple active management strategies be it through either a refurbishment or re-development plan and hence the opportunity for lease re-structuring,” it said.
“The current lease with the annual rental income will generate annual cash flow till 2023 and this will provide a stream of recurring rental income for the Metro Group.”
Metro Holdings revealed that it plans to fund its 50 percent equity commitment via internal funds and bank borrowings.
This article was edited by Keshia Faculin.
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