Asian acquisitions of London commercial properties are reaching the highest levels of the market, with Singapore’s Ho Bee Land announcing this morning that it has agreed to purchase the Scalpel office tower in the UK capital’s primary business district for £718 million ($972 million).
“London has proved to be very resilient in spite of Brexit and the pandemic,” said Ho Bee Land chief executive Nicholas Chua in a statement early this morning. “It has been able to maintain its position as a key global financial hub with a robust office investment market. We are very excited to be able to seize this rare opportunity to acquire a landmark office tower which ticks all the boxes for quality, distinction and sustainability.”
Named for its blade-like profile, the KPF-designed Scalpel stands 190 metres (623 feet) tall and faces the Lloyd’s of London headquarters directly across Lime Street. Anchor tenants at the 38-storey building include the seller, US-based insurer W.R. Berkley; law firm Morrison & Foerster; and Britannia Financial Group, with each occupying five floors.
The 2018-vintage landmark is part of an informal collection of City buildings nicknamed for their resemblance to physical objects, including the CC Land-owned Cheesegrater and Lee Kum Kee Group’s Walkie Talkie, though the Scalpel took the unusual step of adopting the name officially.
Another City Trophy
Central to the project’s appeal is the long-term leases signed by tenants in the building, which secure 10-year passing rent of £29 million for Ho Bee, translating to a yield of 4 percent. The company says it intends to hold the building for the long term.
“The Scalpel’s 10-year secure long-term income would further strengthen the Group’s recurrent income base,” Chua said. The Scalpel has a BREEAM rating of Excellent under the UK sustainable building certification system and an Energy Performance Certificate rating of B, which keep the property aligned with the growing focus on green workplaces among global financial giants.
The purchase of the City of London trophy will bring Ho Bee Land’s London portfolio to more than £2 billion in value post-acquisition and mark the biggest-ever overseas acquisition for Ho Bee Land, which is best known on its home turf for developing luxury residential projects on Singapore’s Sentosa island. The SGX-listed firm has stayed active overseas, including with acquisitions of trophy assets in and around the City of London.
In 2018, Ho Bee’s biggest London deal to date — the £650 million acquisition of Ropemaker Place, a 21-storey office building in Finsbury near the northern tip of the City — brought the firm’s total investment in London property to about $1.7 billion.
Ho Bee has also made sizeable investments in Australia, announcing last November that it would spend A$142 million ($105 million) to acquire a former HNA asset in Melbourne for development into a residential project. In March, the firm had committed A$103.7 million to purchase two housing plots in Victoria and a third in Queensland.
Ho Bee founder Chua Thian Poh recently handed day-to-day control of the developer to son Nicholas, who assumed the chief executive role on the first day of this year after serving as deputy chief executive since 2018.
Ho Bee’s announcement follows Hong Kong-listed Chevalier’s disclosure last week that the group has agreed to buy an office building at 30 King Street in the City of London from the BBC Pension Trust for £45.9 million, furthering a string of property acquisitions by Asian investors in the UK capital.
Earlier this month, Singapore-based Sun Venture completed its purchase of 120 Moorgate, an office building in the City, from WeWork Capital Advisors for £148 million. With the acquisition, Sun Venture added 112,875 square feet of Grade A office area, retail and leisure space to its London portfolio now valued at £900 million.
Singapore’s Koh Wee Meng has also been growing his UK holdings, with the tycoon’s Fragrance Group having closed last month on its purchase of the Holiday Inn Kensington Forum to bring its portfolio of UK hospitality assets to five operational hotels and six development projects, according to the company’s website.
In December, SGX-listed ARA Asset Management — now part of ESR Group — and its Korean partner NH Investment & Securities bought the Marble Arch Place commercial project in London’s West End for £280 million, booking an investment yield of over 4 percent.
Note: This story has been updated to reflect Ho Bee Land’s announcement of the transaction this morning.