Chinese state-owned real estate investor Poly Real Estate has completed its debut purchase in London with the £145m acquisition of 5 Fleet Place, as revealed by CoStar News last month.
Poly Real Estate Group, advised by JLL and listed on the Shanghai Stock Exchange and a subsidiary of China Poly Group, went under offer to buy 5 Fleet Place from Abu Dhabi Investment Authority last month.
The deal marks another entrant for a Chinese investor to the London property market, just weeks after a reluctance to deploy capital in overseas property markets amid fears over the impact of weaker Chinese growth and the resulting stock market turmoil, prompted some Chinese investors to rethink their investment decisions.
Guangzhou-based Poly Real Estate has built its business mainly developing residential and commercial property throughout China.
Aberdeen Asset Management, which manages the building on behalf of ADIA, instructed CBRE to prepare the EC4 building for sale in July following a competitive pitch. It was the latest in a string of property sales in the area that have benefitted from a surge in property prices around the under-construction Farringdon Crossrail station.
The building’s principal occupier, law firm Charles Russell Speechlys, has opted to stay put in the property, removing a potential 68,677 sq ft void in the 130,000 sq ft office block, making the asset more attractive to investors.
Charles Russell Speechlys had been flirting with a wholesale relocation following the October 2014 merger between Charles Russell and Speechly Bircham. Former Speechly Bircham staff based in 6 New Street Square, also EC4, have relocated to 5 Fleet Place.
Arthur Wang, Head of International Business, Poly Real Estate Group said: “Poly is delighted with the acquisition of 5 Fleet Place as our first UK investment. We have a solid confidence as well as a long-term business plan in UK which will be along with the future development plan on both city and nation levels, and will commit to produce continuous benefit to clients, business partners and UK society."
Eric Pang, head of UK China Business Group at JLL added: “With this transaction, Poly has acquired a Grade A office building, with a highly reversionary rental profile in an area of the City which will benefit significantly from existing local development activity and the completion of Crossrail in 2018.”
ADIA’s decision to sell reflected the strong improvement in the rental tone in the area, hardening yields, as well as fierce investor appetite for offices close to Farringdon station where Crossrail will begin operating in 2018.
Much lip service has been paid to the Farringdon story and landlords are looking at ways to maximise their investments in the area.
Five Fleet Place produces an annual income of c.£6.25m and a sale at £140m would reflect a net initial yield of just under 4.5%. ADIA paid £112m for the building in April 2008, reflecting a capital value of £861.54 per sq ft.