Singaporean CDL acquires off-market landmark City of London tower for £385million

Cushman & Wakefield has advised Singapore-listed City Developments Limited (CDL) on the off-market acquisition of 125 Old Broad Street, London EC2N (125 OBS), for £385 million from Blackstone Group LP (Blackstone). The deal represents one the largest single asset sales in the City of London this year.

The property occupies a rare large freehold island site of 0.70 acres, in the heart of the City of London, directly overlooking the Bank of England. Once the home of the London Stock Exchange, following a significant redevelopment in 2008, the building now comprises 329,200 sq ft of Grade A office retail and ancillary accommodation arranged over three basement levels, ground floor, mezzanine and 26 upper tower floors.

Frank Khoo, CDL Group Chief Investment Officer, said: “We believe 125 Old Broad Street provides a complementary addition to our London portfolio, both from a geographic perspective and from a tenant mix perspective. This super prime tower will enable us to gain exposure to the vibrant city office market and we are extremely enthused by our ability to add value to this property and enhance the facilities for the benefit of the tenants such as a remodelled reception and coffee bar facilities. We are further attracted by the building’s rare height in a conservation area and its prominence facing the iconic St Paul’s Cathedral and Bank of England.”

Andrew Hawkins, International Partner at Cushman & Wakefield said: “We were delighted to be tasked by CDL to find them an off-market core plus asset where they could add value. We identified 125 Old Broad Street as having the correct attributes and we’re pleased to have worked with CDL, Blackstone and BH2 in delivering this, without recourse to competition, at an attractive price.”

125 OBS is fully let to 21 internationally renowned office occupiers including Cushman & Wakefield, King & Spalding and China International Capital Corporation.

Central London’s office market is enjoying a robust performance at present with the strongest quarterly leasing volume for three years and year-to-date take-up is 9.2 million sq ft, up 8% on last year. Space under offer is 27% above the 10-year average and the vacancy rate is 4.7%, below many global gateway cities.

Khoo added: “In line with our strategy to grow our recurring income significantly over the next 10 years, this is our second London commercial property acquisition in 2018. We have confidence in the long-term fundamentals of London as a global financial hub with a robust office market. The short-term uncertainties surrounding Brexit have presented us opportunities to acquire assets with deep value. Capitalising on attractive pricing and yields, we have continued to expand our London commercial portfolio through strategic off-market acquisitions of high-performance assets. The tightening of London’s existing office stock and limited new supply will also drive rental growth into 2021. Given its excellent location in a diverse business district, 125 Old Broad Street will continue to attract a strong tenant mix from the finance, legal, insurance, technology, media and telecommunications sectors.”

Cushman & Wakefield, CMS (Lawyers) and KPMG (Tax) advised City Developments Limited (CDL). BH2 and BCLP (Lawyers) advised Blackstone Group LP (Blackstone), the vendor.