Singapore’s Ho Bee Makes Offer for $265M London Office Block

Singapore’s Ho Bee Land is stepping up the scale of its British acquisitions, as the property group is said to be making a play for a £200 million ($265 million) office block in the City of London. The impending deal would mark the southeast Asian developer’s priciest milestone in a $1.3 billion string of London acquisitions since 2013.

Ho Bee, which already has a portfolio of seven commercial buildings in London, has put the grade A tower at 70 Mark Lane under offer, according to an account in the Estates Gazette. The firm is angling to buy the 15-storey building that serves as the headquarters of Zurich Insurance and Miller Insurance from developer Mitsui Fudosan.

The potential deal would be Ho Bee’s second London acquisition this year, after it purchased 67 Lombard Street in June for £129.3 million.

Grade A Office Block Fully Leased

Completed at the end of 2014, this latest trophy is located near the Fenchurch Street railway station within the City of London’s insurance district. The 181,223 square foot (16,836 square metre) mid-rise tower was developed by Tokyo-based Mitsui Fudosan in partnership with Britain’s Stanhope.

Now fully leased, Switzerland’s Zurich Insurance Group and international insurance broker Miller take up a combined total of 153,170 square feet across the building’s first through 12th floors. The Bennetts Associates-designed building has an average lease term of over 10 years with an average rent of £57 ($73) per square foot, according to the Estates Gazette.

The sales process led by international brokerage Cushman & Wakefield quoted an asking price of £200 million, equating to a net initial yield of around 4.5 percent.

Ho Bee Builds its London Portfolio

After investing in London’s residential sector in the late 1990s, Ho Bee has since shifted its focus to commercial assets in the city. In June 2013, Ho Bee acquired Rose Court, an office block overlooking the Thames in Southwark, for £67.2 million ($102 million) – which the company sold off this past February for £94.5 million ($118 million).

The group followed up its maiden commercial acquisition in Britain by picking up 1 St Martin’s Le Grand, a grade A office property in the City of London, for £171 million ($286 million) in March 2014, followed by 60 St Martin’s Lane, a prime office and retail building in Covent Garden, for £43.9 million ($71 million) later that year.

Then in 2015, Ho Bee added three more office properties to its London portfolio: 39 Victoria Street for £144 million ($225 million); 110 Park Street for £45.8 million ($72 million); and the two-tower Apollo and Lunar House for £99 million ($149 million).

In June of this year, a unit of Ho Bee bought a central London office building at 67 Lombard Street for £129.3 million ($168 million), about 100 metres away from the Bank of England and the Royal Exchange. If successful, the 70 Mark Lane acquisition will expand Ho Bee’s London portfolio to eight commercial buildings.

Singaporean Player Sees Opportunity in Britain

Ho Bee’s continuing enthusiasm for London real estate comes amid a wave of Asian investment in the city’s office assets this year, totalling £6.4 billion ($8.4 billion) in the first three quarters, according to figures from brokerage CBRE. Led by Hong Kong-based firms, Asian buyers dominated London office transactions in the third quarter, accounting for £3.2 billion ($4.2 billion) or 68 percent of total volume, the agency said.

“Although the Brexit situation in UK is still uncertain, we are confident of the long-term investment prospects,” Chua Thian Poh, chairman and CEO of Ho Bee Land said in a statement on the company’s third-quarter earnings.

The Singapore-listed group reported net profit of S$54.4 million ($39.9 million) for the quarter, up 103 percent year-on-year, supported by recurring income from investment properties in Singapore and Britain along with development profits from overseas.

Best known as the developer of the Sentosa Cove luxury residential complex in Singapore, Ho Bee also has residential development projects in the cities of Zhuhai, Tangshan and Shanghai in China, as well as Melbourne and the Gold Coast in Australia.

“We will continue to seek business opportunities locally and overseas,” Chua noted in the statement.