Malaysian fund primes €283m London office sale

Lembaga Tabung Haji (TH), the Malaysian Hajj pilgrims fund board, has appointed Knight Frank to coordinate the sale of a prime office building in London for €283 mln, reflecting a net initial yield of 4.6%, PropertyEU can reveal.

The Riverscape property at 10 Queen Street Place, overlooking the River Thames, comprises 216,593 ft2 (20,122 sq m) of Grade A office and retail space, a members’ club and ancillary accommodation arranged over basement, ground and four upper floors.

The sale comes as TH looks to add more property investments in an effort to rebalance its asset mix. The restructuring plan means that the company is investing more in fixed income. Currently, this asset class makes up 58% of its strategic asset allocation.

The firm has almost 10% of its total assets in foreign investments, though its mandate allows for up to 18% of its total assets to be placed overseas. Its investments abroad include four properties in the UK, one in Australia and five hotels in Saudi Arabia.

TH bought the building in 2012 for £165 mln (€197 mln). Four years later it tried to sell the building but to no avail. The tenant at the time, King & Wood Mallesons, collapsed and thwarted a potential £220 mln exit. 

A year later, the Malaysian fund announced significant refurbishment works would take place. Improvements cost around £15.6 mln and were completed in late 2018. A 20,785 ft2 roof terrace is regarded as one of London’s largest, offering views over the capital.

Currently, there are nine tenants, and across the building, the vacant space comprises only 1.7% of the total area. Furthermore, a number of leases and licenses are subject to annual RPI increases.

Prime London assets have continued to demonstrate liquidity throughout the past 18 months. The low-interest rates, combined with the possibility of future rental growth prospects and scarcity of prime location stock, has driven demand for core long-term income.

Riverscape produces a gross passing rent of circa £11 mln per annum. The long leasehold provides approximately 133 years unexpired.





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