Link Asset Management Limited, the manager of Link Real Estate Investment Trust has agreed to acquire The Cabot, 25 Cabot Square for £380 million.
Link’s Chief Executive Officer, George Hongchoy, said: “The Cabot is exactly the kind of stable income-producing high-quality asset with long-term growth potential that we’re looking for. It’s a prominent, Grade A building and one of the few freehold properties in Canary Wharf. It’s well located with excellent connectivity and accessibility and it is almost fully occupied with long leases to high quality tenants. The transaction will immediately be earnings accretive to Link.
“Today’s acquisition is part of our Vision 2025 growth strategy to diversify and improve portfolio mix, enhancing our ability to deliver sustainable returns for unitholders. A diversified portfolio can strengthen our portfolio resilience, allowing us to benefit from the varied economic cycles of different markets. Going beyond our home Hong Kong and Mainland China, we’re looking at opportunities in the UK, Singapore, Australia and Japan – transparent and liquid markets with sound legal frameworks and strong economic fundamentals.”
The Cabot has undergone extensive refurbishment and extension over the six years to March 2020. The £380 million consideration paid to HGR Liquidating Trust represents a 0.4% discount on the 17 July 2020 valuation by Colliers International (Hong Kong) Limited.
The 17-storey building offers 481,605 square feet of space and is being acquired with an annual net passing rent of £18.83 million and weighted average lease expiry of 10.9 years. The transaction offers an equivalent gross yield of 5% based on the property’s net passing income and the purchase price.
Link will fully fund the investment through internal resources as well as new facilities with the intention to fully hedge any foreign exchange fluctuations. Upon completion, Link’s pro-forma adjusted ratio of debt to total assets will rise from 17.8% to 19.2%, based on its consolidated financial position as at 31 March 2020.[Note 2]
The transaction is expected to complete on 25 August 2020. Following completion, Link will engage Patrizia UK Limited to provide asset management services for The Cabot.