Bookmark & Share
City Developments Limited (CDL) has acquired a prime freehold Grade A office tower in London for £385 million (approx. S$687 million) – marking its second London commercial property acquisition for the year.
In September, CDL acquired freehold Grade A commercial building Aldgate House for £183 million.
With a net lettable area (NLA) of about 329,200 sq ft, 125 Old Broad Street (pictured) is located in the heart of London and comprises a Grade A office tower with ancillary retail space as well as three basement levels.
It is bounded by Old Broad Street, Throgmorton Street and Threadneedle Walk, overlooks St. Paul’s Cathedral and is just 100 metres away from the Bank of England headquarters.
Built in the 1970’s, the landmark building housed the headquarters, offices and trading floor of the London Stock Exchange until 2004.
It is fully leased to internationally renowned tenants, including King & Spalding, China International Capital Corporation and Cushman & Wakefield’s European headquarters, with passing yield of about 4.7 percent.
CDL revealed that the top five tenants account for over 60 percent of the total NLA and income. It noted that there is strong potential for positive rental reversion given that average passing rent is currently around 25 percent below prime average rents within the City of London.
The building’s overall weighted average unexpired lease term of five years (to lease breaks) and 5.4 years (to lease expiries) is also attractive, it added.
“We have confidence in the long-term fundamentals of London as a global financial hub with a robust office market. The short-term uncertainties surrounding Brexit have presented us opportunities to acquire assets with deep value,” said CDL Group chief investment officer Frank Khoo.
“The tightening of London’s existing office stock and limited new supply will also drive rental growth into 2021. Given its excellent location in a diverse business district, 125 Old Broad Street will continue to attract a strong tenant mix from the finance, legal, insurance and technology/media/telecommunications sectors.”
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
Related Articles:
CDL Hospitality Trusts see strong financial growth in Q4 2017