Developer Ho Bee Land has acquired more prime office property in London, it announced yesterday.
The firm's subsidiary, Kempster Investments, is paying £99 million (S$210 million) for the freehold Apollo House and Lunar House in Wellesley Road, Croydon.
Ho Bee said the properties will generate income until their leases expire in June 2023. The acquisition should be completed by the end of this month.
The two buildings of 20 storeys and 22 storeys, which provide a total space of 441,797 sq ft, were built in the late 1960s and underwent refurbishment in 1995 and 2000.
They are in the centre of Croydon and a stone's throw from East and West Croydon rail stations.
The 19,100 sq m site is seen as being underdeveloped but big enough to accommodate a major refurbishment.
Ho Bee said the two office buildings are fully let to the British government in two separate leases until June 23, 2023. The total annual rent is about £5.5 million, or £12.50 per sq ft, which is seen as being very low and ripe for an increase.
The five-yearly, upward-only rent review is due this month and again in December 2020. The annual rent reflects a net initial yield of 5.35 per cent, after allowing for transaction costs.
Ho Bee Land chief executive and chairman Chua Thian Poh said in a statement yesterday: "The acquisition increases the company's investments in the UK to £600 million in the last three years.
"This acquisition is unique as it offers us recurrent income till 2023. In the interim, it allows us ample time to plan and maximise the development potential of the site."
In July, Ho Bee paid about $300 million for a 10-storey office building in Victoria Street, London, and followed up by buying a five-storey block in Park Street for $98 million in August.
Ho Bee shares closed 0.07 cent higher at $2.07.