Straits Trading to Buy UK Business Park Assets From Brookfield for $157M

Singapore’s Straits Trading is adding to its UK real estate holdings with the acquisition of properties at a business park in the southwestern English city of Gloucester for £130 million ($157.7 million).

The real estate arm of the SGX-listed conglomerate has agreed to buy seven office buildings, two industrial buildings and six plots of development land at Gloucester Business Park from Advanced Research Clusters, a property platform of asset management giant Brookfield. The Canadian firm set up ARC last year after acquiring the Arlington Business Parks portfolio from US private equity major TPG for £714 million.

Upon completing the Gloucester deal, Straits Trading will have added a second UK business park to its portfolio after picking up a property near London from LaSalle Investment Management for £76.7 million in 2020.

“Following our acquisition of Bourne Business Park in Surrey, UK, we are delighted to acquire this portfolio of high-quality business assets in Gloucester Business Park as it fits our overall investment focus on new economy assets,” Straits Real Estate CEO Desmond Tang said Wednesday in a release. “It offers a balanced blend of recurring income at an attractive yield, while providing upsized return opportunities through development of logistics warehouses — a sector currently in strong demand.”

Scope for More Industrial

The Gloucester assets comprise 522,000 square feet (48,495 square metres) of net lettable area, including 311,000 square feet of offices and 211,000 square feet of industrial space, as well as the last remaining development plots within the 276 acre (111.7 hectare) park along the M5 motorway.

The development land provides five plots consented for industrial and logistics and one small plot at the entrance targeted for retail use, Straits Trading said. Plans call for construction of up to 310,000 square feet of industrial buildings on the land.

The existing office and industrial properties are fully occupied, with a weighted average lease expiry of 8.7 years. Tenants include EDF Energy, Ecclesiastical Insurance, GE Aviation and Lockheed Martin.

TPG had acquired the Arlington portfolio of 20 business parks in 2017 for about £500 million from a joint venture of Australian developer Goodman and London-based Legal & General before selling the assets to Brookfield in 2021.

Real estate information provider CoStar reported in March that ARA Dunedin, an affiliate of Singapore-based ARA Asset Management, was poised to buy Gloucester Business Park for £135 million, a deal that appears in doubt after Straits Trading’s announcement this week.

Mingtiandi reported in 2016 that Chinese sovereign fund CIC planned to acquire three Arlington properties — Hammersmith Embankment, Oxford Business Park and Uxbridge Business Park — for £250 million, but the Hammersmith park was ultimately sold to Workspace Group for £120 million and the other two assets remain listed in the ARC portfolio.

British Collection

In addition to Bourne Business Park, which Straits Trading acquired from LaSalle two years ago, the conglomerate has invested in four UK retail parks through its partnership with a Savills Investment Management vehicle.

Savills IM announced in April of this year that the UK Value Boxes fund backed by Straits Trading and the family office of ARA founder John Lim had acquired two retail parks in England and one each in Wales and Scotland for a combined £75 million.

The fund is pursuing a “contrarian” strategy that aims to capitalise on the returns available from big-box retail in UK suburban centres and exploit the mismatch between the relatively low property prices and high yields available in British retail parks as institutional investors focus on logistics, data centres and other more fashionable segments of the market.

Straits Trading disclosed in a bourse filing last October that Straits Real Estate would commit up to £60 million to UKVB as part of a strategy to redeploy capital from its existing high-quality but low-yielding property portfolio into potentially higher-return real estate opportunities.