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 Building1” or collectively known as the “Nova Properties”) in Victoria for an agreed value of £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.
Mr. Chong Kee Hiong, Chief Executive Officer of the Manager, commented: “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%3 will provide a DPU accretion of 4.9%4 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.”
With the acquisition of Nova Properties, Suntec REIT’s assets under management (“AUM”) will grow from S$10.7 billion5 to S$11.5 billion across a total of 10 properties in Singapore (77.2% of AUM), Australia (16.1% of AUM) and the United Kingdom (6.7% of AUM).
Office Portfolio weighted average lease expiry will be lengthened to 4.4 years while the Retail Portfolio weighted average lease expiry will be extended to 2.8 years. The acquisition is likely to be funded by GBP and SGD denominated loans.
The acquisition is subject to Unitholders’ approval at an extraordinary general meeting which is expected to be convened in December 2020.
Completed in 2016 and 2017, the Nova Properties is the newest large scale addition to the West End. Constructed to the highest standards, it has a total net lettable area (“NLA”) of approximately 559,000 sq ft and a long leasehold tenure of 1,042 years.
The Nova Properties are 100% occupied by quality office tenants from diversified sectors with a weighted average lease expiry of 10.6 years6. 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. Ancillary retail in the development offers dining, entertainment and leisure choices, providing a unique mix of food and beverage offerings and fitness amenities for both the office tenants and visitors in the Victoria area.
Landsec, the joint venture partner for the other 50.0% interest in Nova Properties, is one of the largest commercial property development and investment companies in the United Kingdom. Listed on the London Stock Exchange, Landsec owns and manages approximately 24.0 million sq ft of space with a combined portfolio value of £12.8 billion9.
Mr. Chong said: “We are delighted to partner Landsec, which has a strong track record in managing assets in the United Kingdom. With their local knowledge and best-in-class practices, we are confident that the Nova Properties will continue to be a landmark, sought after development in London.”
Marcus Geddes, Head of Property at Landsec, added: “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.”