Ho Bee Investments to acquire London property for £67.2m

It's a 157,406 sqf freehold office.

According to CIMB, Ho Bee announced that it will acquire Rose Court, a 157,406 sqf freehold office located at Southwark Bridge Road, Central London, through its wholly-owned subsidiary Grandiose Investments Pte. Ltd. (GIPL). 

CIMB noted that the purchase consideration of £67.2m will be financed via a mix of internal funds and bank borrowings, scheduled to be payable in full on 24 June 2013. The property will continue to be fully leased to the Secretary of State for Communities and Local Government, with lease expiry in Sep 2018.

Here's more:

With passing rent in the range of £4.3m per year (£27psf), this translates to an attractive initialrental yield of 6% for the acquisition. We view this as an opportunistic move by Ho Bee, in view of the current Southwark prime rents of £45psf, 63% higher than the passing rent under government lease.

We expect positive rental reversion in the range of 100% in 5 years’ time when the current government lease expires. Office rentals at Southwark are estimated to increase by at least 5% p.a. over the next five years.

We also see this as a good move by Ho Bee to increase exposure to investment properties in view of the currently slow high-end residential development sales in Singapore.