PNB projected to get more than 5.5% yield from latest London office

PETALING JAYA: Permodalan Nasional Bhd's (PNB) latest and fourth purchase of a London office building is expected to have a yield exceeding 5.5%, a source familiar with the deal said.

PNB is expected to seal the purchase of Woolgate Exchange at 25, Basinghall Street in London by the end of this month, bringing its total investment in UK properties to more than £1bil in a span of four months.

On Thursday, group president and chief executive officer Hamad Kama Piah Che Othman told Bernama that “PNB has changed”.

“In the past, it was shares but now we are looking at real estate which would bring in stable returns,” he said.

Inclusive of its purchase of Santos' Place, in Brisbane, Australia, PNB has spent RM4.9bil on both continents. PNB bought Santos' Place for A$290mil in August 2010. Since then, it seems to have shifted its focus to the prime London.

According to several websites, the principal tenant in Woolgate Exchange is German bank West LB. The lease is until 2020. The next rent review is in three years, in 2015.

According to two London-based websites, the selling price for Woolgate Exchange was set at £290mil (RM1.4bil). The 350,000-sq-ft office building was constructed in 2000 and has an annual rent of more than £7mil.

In 2006, the same property was purchased by Irish property investment group D2 Private for £325mil when British property prices were on an uptrend.

The nine-storey building, which comes with a basement floor, is located within 150 metres of the Bank of England, a salient feature of the property considering that London is famed for its financial centre status.

PNB has attracted the interest of the British property fraternity when it bought a 12-storey office space in Milton & Shire House on 1 Silk Street for £350mil in December.

Earlier this month, it acquired two other properties, 90 High Holborn and One Exchange Square, from German fund manager KanAm for £500mil.

By The Star