British Land sells majority stake in Paddington Central assets to GIC for $886 million

April 25, 2022

British Land sells majority stake in Paddington Central assets to GIC for $886 millionBENGALURU: British Land said on Monday it had sold 75% stake in its Paddington Central assets to Singapore‘s sovereign wealth fund GIC for 694 million pounds ($885.9 million), with the UK-based landlord looking to invest in high-growth warehousing properties.

Commercial landlords have struggled over the past two years as multiple COVID lockdowns and an extended moratorium on rent collection has hurt retail-focused assets, while a shift to remote working has weighed on office portfolios.

Paddington Central in London is a mixed-used campus with predominantly office spaces as well as some retail and leisure properties, housing companies such as Microsoft, Visa and Prudential.

The sale consideration was 1% below the September 2021 book value of the assets and represents a net initial yield, a key ratio in real estate transactions, of 4.5%.

“Proceeds from the transaction will be invested into value accretive development opportunities we own across our portfolio as well as growth areas including development-led urban logistics in London and innovation campuses,” British Land said in a statement.

Warehousing or logistics business now looks a safer bet for commercial property firms, thanks to increasing demand from rapid delivery ecommerce companies, which require small urban fulfilment centres.

The deal has created a joint venture with GIC owning 75% of the combined assets and British Land, whose shares slipped about 1.8% in morning trade, holding the rest.

British Land said two properties within the Paddington Central campus, The Novotel at 3 Kingdom Street and the development site at 5 Kingdom Street, currently remain outside the joint venture.

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