Goldman Sachs is said to have picked Korea’s National Pension Service (NPS) as the preferred buyer of its soon-to-be-completed European headquarters in London, according to a report in the Korean press, with the UK office building expected to change hands for between £1 billion to £1.5 billion ($1.3 billion to $2 billion).
The US investment bank has reportedly been in discussions since at least February of this year regarding a sale and lease-back agreement for the 78,000 square metre (840,000 square foot) building on Farringdon Street in the UK capital’s EC4 district, as Goldman CEO Lloyd Blankfein has warned repeatedly of risks associated with the coming Brexit scheme.
Should the Korean sovereign wealth fund follow through with signing an agreement to purchase the nine-storey Kohn Pedersen Fox-designed building, it would mark the third time this year that investors from South Korea have made an en bloc acquisition of London property for more than £248 million, and the fifth major Asian buy this year in the city.
NPS Beats Out Field of Bidders, Including CK Asset
The reported milestone comes after the NPS, which manages $450 billion in funds, was reported one month ago to be the lead bidder in a contest that also featured Hong Kong’s CK Asset Holdings and billionaire Amancio Ortega’s Pontegadea Inversiones SL making it to the short list of investors vying for the 78,000 square meter (840,000 square feet) building in the City of London.
The report indicates that Goldman Sachs are now in final negotiations on the price of the asset and the ongoing rent to be paid by the investment bank, with the investment yield on the deal expected to be 4.1 percent, according to an account last month by CoStar. Goldman Sachs is due to move into the office project early next year, and under the terms of the deal, to be taking responsibility for finding additional tenants to fill any unoccupied space.
The NPS, which has around $450 billion in assets under management, stands as the third largest pension fund in the world. In May of this year the Korean fund was said to be planning to boost the overseas allocation of its overall holdings to 40 percent from the current 29 percent within the next four years, as it also sought to raise its investments in alternative asset classes, including real estate, according to an account in The Korea Economic Daily.
Sliding Pound Pulls Asian Investors to London
Thanks to growing uncertainty around the British government’s Brexit plans, the British pound has lost more than 14 percent of its value against the US dollar this year, making London prime hunting ground for Asian investors keen on finding bargain-priced real estate.
In March, Korea’s Mirae Asset Daewoo teamed with their compatriots at NH Investments and Securities to back the £248 million acquisition of Blackstone’s Cannon Bridge House in EC4 by FG Asset Management and Valesco. Then Mirae Asset Management came back to the City in early May to buy 20 Old Bailey, also from Blackstone, for £341 million.
In mid-June Singapore’s Ho Bee Land agreed to acquire Ropemaker Place in Londong for £650 million, and Hong Kong’s CK Asset still holds the title for the UK’s bigges en bloc transaction this year after Li Ka-shing’s son Victor agreed, also in June, to buy the UBS headquarters in London from GIC and British Land for £1 billion.