Suntec REIT to acquire 50% interest in London commercial property for £430.6m

Suntec REIT buys 50% interest in London commercial property for £430.6m
Nova Properties in Victoria, London, UK Image: Suntec REIT

ARA Dunedin Asset Management LLP (ARA Dunedin) has confirmed the acquisition of a 50 percent stake in the landmark Nova Estate (Nova) in Victoria, London by its capital partner, Singapore-listed Suntec Real Estate Investment Trust (Suntec REIT).

Suntec REIT has entered into a sale and purchase agreement with Canada Pension Plan Investment Board to acquire a 50.0% interest in two Grade A office buildings with ancillary retail (Nova North, Nova South and The Nova Building or collectively known as the Nova Properties) in the heart of Victoria, West End, London for £430.6 million.

The remaining 50.0% interest in Nova Properties will continue to be held by Land Securities Group (Landsec), the developer and asset manager of the Nova Properties, said in the statement.

The landmark Nova Properties comprises 480,292 sq ft of world-class Grade A office accommodation and 78,811 sq ft of food and beverage space across three state-of-the-art buildings that were completed in 2017.

The Nova Properties are situated in the heart of London. Besides being near to key landmarks such as the Buckingham Palace, Westminster Abbey and the Houses of Parliament, the buildings are also situated opposite the Victoria Station, an important interchange for the London Underground network and Victoria Coach station. Victoria Station is also United Kingdom’s second busiest railway station with direct train linkage to Gatwick Airport.

The Nova Properties are 100% occupied by quality office tenants from diversified sectors with a weighted average lease expiry of 10.6 years. The strong income stream from the office tenants constitute approximately 90% of Nova Properties’ total rental income. Key office tenants include Atkins, The Argyll Club, a government ministry, Vitol and BlueCrest.

Chong Kee Hiong, Chief Executive Officer of the Manager, said, “The Nova Properties are a strategic fit with Suntec REIT’s existing portfolio of high quality commercial assets in Singapore and Australia. These two premium Grade A office buildings will enhance the
resilience, diversification and quality of Suntec REIT’s portfolio with income contribution from high quality office tenants and long weighted average lease expiry of 11.1 years. The net property income yield of 4.6% will provide a DPU accretion of 4.9% upon completion of the acquisition in December 2020. There is also a 2-year guarantee on the retail income which will provide rental protection to ride out the current pandemic.”

Marcus Geddes, Head of Property at Landsec, commented: “We’re very pleased to welcome Suntec REIT as a partner for their first investment into the United Kingdom. We are also delighted that Suntec REIT has chosen to invest in Nova, highlighting how Landsec continues to deliver best-in-class office and retail space to the customers of the scheme.”