Singapore’s GIC Buys 75% Stake In Paddington Central

Singapore’s GIC Buys 75% Stake In Paddington Central For £694m

UNITED KINGDOM – Singaporean sovereign wealth fund GIC has agreed to acquire a majority stake in the 11-acre Paddington Central estate, an office-led mixed-use campus in the London borough of Westminster, for £694 million, reported the London Evening Standard on Monday evening (25 April, SGT).

GIC is purchasing a 75 percent interest in the commercial campus, while seller British Land will continue to own a 25 percent interest.

The transaction establishes a new joint venture (JV) to operate the commercial complex, which houses established companies, such as Microsoft, Finastra, Kingfisher, Vodafone, and Mars.

Moreover, the Singapore sovereign wealth fund has been granted an option to buy at a later date a half-stake in 5 Kingdom Street, the last office project built at Paddington Central, and the Novotel hotel at 3 Kingdom Street.

Despite concerns that businesses would no longer require much office space amidst the COVID-19 pandemic, GIC said it’s bullish that excellent office space would continue to lure occupants.

“We are seeing returning demand in the take-up of new office spaces that are of high quality and in prime locations,” said Tracy Stroh, Region Head of Europe for real estate at GIC.

In addition, Paddington is poised to become a key hub for travellers from the west, as Crossrail will open in just a few months.

Previously, GIC and British Land teamed up to carry out the Broadgate project in the City of London.

“Our earlier investment in Broadgate has demonstrated the high value of acquiring central London campuses and we are confident that this asset will generate resilient long-term returns,” added Lee Kok Sun, Chief Investment Officer of real estate at GIC.

British Land purchased Paddington Central for £470 million in 2013. Back then, the commercial development only consisted of 3 buildings, a retail and leisure cluster, and 2 development sites, so the developer invested in offices and restaurants in the area, in addition to new green spaces.

British Land spent a total of £680 million acquiring properties in the area. In 2015, the developer concluded the acquisition of 1 Sheldon Square there for £210 million and it then completed the development of 4 Kingdom Street in 2017.

The price paid by GIC for its 75 percent stake in Paddington is 1 percent below the property’s book value as of September 2021. The latest transaction values the commercial campus at roughly £867 million.

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