Singapore’s CDL buys Aldgate House for £183m

By James Buckley - Friday, September 14, 2018 11:13

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Singaporean investor, City Developments Limited (CDL) has bought Aldgate House in the City of London for £183m from Hermes Investment Management and Canada Pension Plan Investment Board (CPPIB).

Hermes Real Estate Investment Management and Canada Pension Plan Investment Board opted to sell Aldgate House for around £175m in June, as revealed by CoStar News.

The 50:50 office joint venture instructed JLL and Corbett Northam to market the EC3 building for a net initial yield of c 5.25% and a capital value of £810 per sq ft.

The partnership, which formed in July 2013, has refurbished and re-let several of the office floors during their ownership.  

The asset provides more than 214,000 sq ft of office and retail space next to Aldgate Underground station.

The building is multi-let to tenants including ISG, LCH, Taboola Europe and Transperfect Translations.

Chris Taylor, Head of Private Markets at Hermes Investment Management, said: “The disposal of Aldgate House marks the culmination of a proactive asset management strategy that was put into place. This has included significant refurbishment works and the regearing of leaseholds within the building. Capital from this sale will be put towards the selective acquisition of assets, both within the City of London and further afield, that present an opportunity for added value to be achieved.”

The overall weighted average unexpired lease term (WAULT) for the building is 6.2 years (to lease breaks) and 7.9 years (to lease expiries).

Mr Frank Khoo, CDL group chief investment officer, said: “A key focus for CDL is to grow our recurring income significantly over the next 10 years through acquisitions and organic growth which will help to mitigate the volatility of development projects. This acquisition will enhance CDL’s recurring income portfolio.

“We see tremendous potential in this prime commercial building and we continue to believe that London will remain as a global financial hub. The vibrant Aldgate district is home to major occupiers from a diverse sector base including financial, fintech, insurance, legal, cultural and creative companies.

“It is also emerging as the heart of Digital London and the presence of healthtech companies is expected to increase with plans to develop a world-class life sciences research facility in the vicinity.”

“There is also potential to undertake AEI to add value to this property. We can refurbish office spaces to increase the rental and convert unused areas to provide additional facilities such as a restaurant. Planning consent has also been obtained for the creation of additional massing at the basement for a commercial gym. CDL will continue to seek opportunities in the UK to further enhance our recurring income streams.”

In the UK, CDL already owns another recurring income asset, at Development House, which was acquired in 2016. The 28,000 sq ft property at Leonard Street, Shoreditch district, remains fully leased with vacant possession expected from Q3 2018. The site has obtained planning approval to be redeveloped into a nine-storey building consisting of over 72,000 sq ft of NLA.

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