The largest real estate investment trust company in Asia, Link Real Estate Investment Trust (Link REIT), has just made its official entry into the European market with the purchase of a property that housed Morgan Stanley's headquarters in London. The Hong Kong-based firm acquired the massive office complex in a deal worth an estimated $487.5 million.
The London property called The Cabot, which is located at 25 Cabot Street in Canary Wharf, will be the company's first European real estate property. Link REIT purchased the property from HGR Liquidating Trust at a marginal 0.4 percent discount when compared to its current market valuation.
Link REIT's chief executive officer, George Hongchoy, mentioned in a statement published on Sunday that the acquisition should greatly enhance the company's ability to deliver sustainable returns to its stakeholders moving forward. The executive added that the purchase is part of the company's much wider Vision 2025 growth strategy, which entails the further diversification of its portfolio to take advantage of varied economies and markets worldwide.
The Cabot, which was erected in 1991, has gone through a number of major refurbishments and improvements over the past few years. The property, which yields about 481,605 square meters of usable office space, has an annual net passing rent of around £18.83 million.
Hongchoy stated that the complex is the exact type of income-generating asset that Link REIT was looking for to stabilize its long-term growth. He described the property as a "Grade A" building as it is one of only a few freehold properties that are located along the Canary Wharf. Apart from its excellent location and accessibility, the property is also already fully occupied with long lease tenants. About 99 percent of the entire complex is occupied by Morgan Stanley, a co-working space company, and a government department.
Analysts at CGS-CIMB Securities pointed out that the amount paid for the property underscores the continued impact of the coronavirus pandemic and Brexit on the British property market. Office rentals and property valuations have continued to decline in the region since the start of the health crisis. With the disease's economic effects still lingering, uncertainty still looms over the future prospects of the country's property and officer markets.
Link REIT, which has massive amounts of available cash, is one of the few companies that can take advantage of the downturn in London's office sector. The company announced that it plans to fully fund the acquisition without the need to secure additional financing.