City Developments acquires central London office tower for 385 million pounds

City Developments building and Lau Pa Sat food court in Singapore’s central business district (CBD); taken October 2018.City Developments building and Lau Pa Sat food court in Singapore’s central business district (CBD).

City Developments said on Friday that it acquired a second commercial property in London, completing the purchase of the fully occupied office tower at 125 Old Broad Street, in the main financial district, for 385 million British pounds, or around S$687 million.

The price works out to around 1,170 pounds, or around S$2,088, per square foot, it said.

The property has a Grade A office town and accompanying retail space with a net lettable area of around 329,200 square feet over 26 floors and three basement levels, as well as parking facilities, it said.

The property has a passing yield of 4.7 percent, it said.

“With average passing rents currently about 25 percent below prime average rents in the City of London, there is strong potential for positive rental reversions,” City Developments said.

The acquisition was City Developments’ second commercial property in England’s capital.

Frank Khoo, the group’s chief investment officer, said the acquisition of City Developments’ second commercial property in England’s capital was in line with its strategy to increase its recurring income streams “significantly” over the next decade.

“We have confidence in the long-term fundamentals of London as a global financial hub with a robust office market. The short-term uncertainties surrounding Brexit have presented us opportunities to acquire assets with deep value,” Khoo said.

“The tightening of London’s existing office stock and limited new supply will also drive rental growth into 2021,” he added.

In September, City Developments acquired Aldgate House, a commercial building in London, for 183 million pounds.