IN what is one of the biggest offshore property deals by a Singapore company in recent years, Mapletree Investments is paying more than £500 million (S$1 billion) for a 79-ha, freehold business park in the UK from Oxford Properties Group.
This also marks Mapletree's largest acquisition outside Asia.
The Temasek unit said on Wednesday that the acquisition of Green Park is in line with its strategy to seize new growth opportunities in developed markets such as the UK, underpinned by strong economic and property fundamentals, to broaden its investment footprint.
No investment value was disclosed, though reports in the UK media last month said Oxford Properties was looking to offload the asset for £500 million.
Even with the impact on transactional costs from UK's recent stamp duty hike for property purchases, Mapletree is still expecting an initial yield of around 6 per cent for this purchase, said Chua Tiow Chye, Mapletree group chief investment officer and regional chief executive for North Asia and New Markets.
Nestled within a campus setting in Reading, an important commercial hub of the Thames Valley, the business park is currently home to global corporations such as PepsiCo, Huawei, Quintiles, Veritas and Cisco.
It has approval to provide about 2.1 million sq ft in lettable space; some 1.4 million sq ft of Grade-A offices across 19 buildings have been built, with a strong occupancy of 93 per cent.
Plans are afoot to increase the park's lettable space to about 2.5 million sq ft. The development of the unbuilt space will be phased in anticipation of future demand for offices.
Oxford, the real-estate arm of the Canadian pension fund OMERS, had bought the business park from Prupim (renamed as M&G Real Estate) for around £400 million in 2011.
Mapletree group chief executive officer Hiew Yoon Khong noted that this acquisition is aligned with the group's current five-year business plan to acquire quality, income-producing assets - those with long weighted average leases to expiry and anchored by a strong tenant base - to give stable and growing yields.
To further create value and enhance occupiers' experience at Green Park, Mapletree will review the park's master plan and put in place new facilities and activities to provide occupiers with a conducive live-work-play environment, Mr Hiew said. "We are happy to have Oxford working alongside us until the end of the year to ensure a smooth transition, and work on some of these asset-enhancement initiatives."
The current offerings in Green Park include support amenities such as conferencing facilities, convenience retailers, as well as food-and-beverage (F&B) outlets housed in various amenity centres and standalone buildings. More complementary spaces for retail, F&B and hospitality facilities are planned to enhance the business park.
Including Green Park, Mapletree has shored up assets under management of about £1.4 billion in the UK since its foray into the country last year.
Attracted to strong yields in UK student accommodation, Mapletree acquired in March a portfolio of 25 buildings with more than 5,500 beds in 12 core university cities, including London, Edinburgh and Manchester for £417 million, trumping rival bidders from the US, Russia and the Middle East. The initial yield on the portfolio was also said to be 6 per cent.
Mr Chua said the group continues to seek investment opportunities in Asia, its core growth market, as well as in markets new to Mapletree, such as the United States, Australia and Europe, particularly the UK and Germany.
Mapletree is still keen on deploying its dry powder in offices and business parks in city-fringe locations and key regional markets, as well as other sectors such as student housing, serviced apartments and logistics space in the UK.
Singapore has been the top source of outbound capital in the region for real-estate investments in recent years, driven by big-ticket purchases by heavyweights including Mapletree, GIC and ARA Asset Management Group.
This article was first published on May 19, 2016.
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