Malaysia’s Tabung Haji makes £165m debut City splash

By James Buckley - Monday, September 17, 2012 15:05

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Malaysian haji pilgrims fund Lembaga Tabung Haji has completed its debut purchase in London, laying down £165m for a City trophy, CoStar News can reveal.

Tabung Haji has bought SJ Berwin’s distinctive City offices at 10 Queen Street Place, EC4, for £165m, reflecting an initial yield of 5%.

The deal was first revealed by Costar News in July, when Tabung Haji entered into talks to buy the 221,198 sq ft block from Irish investor Jaguar Capital.

Jaguar bought the building, which is principally let to SJ Berwin on a lease expiring in December 2025, from Norwich Property Trust Ltd for £146.25m in 2008, reflecting a 5.6% yield.

Lembaga Tabung Haji, which was advised by Shariah-compliant bank Gatehouse Bank and Savills on the deal, is the Malaysian hajj pilgrims fund board, formerly known as Lembaga Urusan dan Tabung Haji. The fund facilitates savings for the pilgrimage to Mecca through investment in Shariah-compliant vehicles.

Adam Cavanagh, Head of Real Estate at Gatehouse Bank, said: "The London property market, with its high concentration of global headquarters, long leases and upward only rent reviews, is still seen as a safe-haven for investment.

"This particular property, with a well-established tenant and highly desirable location, exemplifies the qualities that overseas investors are looking for right now. As such, it presented an excellent opportunity to make an acquisition that promises long term income at an attractive yield.

"Tabung Haji has been looking for opportunities to diversify its portfolio and with its first foray into the London market the fund has made an excellent acquisition that offers a highly sustainable return on investment."

10 Queen Street Place is the second sale Jaguar is currently undertaking in the City. The Irish investor is currently under offer to sell Garden House to Legal & General Property for for £22m - a 7.45% yield, as revealed by CoStar News earlier this month.

A report published by CBRE last month claimed that Irish investors remained net sellers of commercial property in the UK in the first six months of the year. The report found that Irish investors disposed of £545m of commercial real estate in the UK in H1.

Norwich Property Trust bought 10 Queen Street Place from Blackstone in 2006 in a deal that at a 4.5% yield reflected a record for a large tenanted City building in that cycle.

Blackstone let 180,000 sq ft at 10 Queen Street Place, formerly known as Thames Exchange, to law firm SJ Berwin in 2004 at around £36 per sq ft.

The building, close to Cannon Street station and overlooking the Thames from the north end of Southwark Bridge, was developed in the 1980s but redeveloped in the 2000s by Blackstone via a John Robertson Architects-designed makeover.

jbuckley@costar.co.uk

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