Nova North an office property in West End, London. (Photo: Google Maps)

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 in West End, London.

The fully-occupied properties are namely Nova North, Nova South and The Nova Building1.

The stake is being acquired for GBP430.6 million (USD556 million).

The remaining 50.0% interest in the Nova properties will continue to be held by Land Securities Group (Landsec), the developer and asset manager of the properties.

“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”, said Chong Kee Hiong, CEO of the REIT’s manager.

“The net property income yield of 4.6% will provide a DPU accretion of 4.9% upon completion of the acquisition in December 2020”, he said.

“There is also a 2-year guarantee on the retail income which will provide rental protection to ride out the current pandemic”, he added.

With the acquisition of Nova Properties, Suntec REIT’s assets under management (AUM) will grow from SGD10.7 billion to SGD11.5 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 (WALE) will be lengthened to 4.4 years while the retail portfolio WALE will be extended to 2.8 years.

The acquisition is likely to be funded by GBP and SGD denominated loans, and is subject to unitholders’ approval at an extraordinary general meeting which is expected to be convened in December 2020.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.