KUALA LUMPUR (March 27): Gamuda Bhd, together with its partner Castleforge Partners Ltd — a UK-based real estate private equity investor — has bought the eight-storey commercial building Winchester House London for £257 million (RM1.39 billion).
The construction and property group and its partner, via Venta Belgarum II Ltd Pt (VB II), have signed a sale and purchase agreement with Wessex Winchester Ltd Pt to acquire 100% equity interest in Wessex Winchester Propco Ltd, the owner of the 317,000 sq ft Winchester House. Gamuda's wholly owned Gamuda Land (Labuan) Ltd holds a 75% stake in VB II, while Castleforge’s wholly-owned partnership entity Athelstan Ltd owns the remaining 25%.
Post acquisition, Gamuda said it plans to refurbish and upgrade the property into a best-in-class, top-rated environmentally sustainable ESG office space that caters to global or multinational financial institutions, legal firms, and mega-tech corporations.
“Gamuda intends to dispose of this investment by the fifth year or prior, after locking in strong pre-lease arrangements by quality tenants,” it added, noting that the Winchester House is Deutsche Bank AG's current London headquarters, with its lease due to expire in April 2024.
The acquisition is part of its property development arm Gamuda Land’s quick-turnaround-project (QTP) strategy, which aims to build a regional portfolio of real estate projects with high internal rates of return with investment time frames of five years or less, Gamuda's filing showed. “The QTP strategy is intended to diversify the portfolio, maximise returns on capital, and grow Gamuda Land’s geographical presence beyond Malaysia,” the group said.
According to Gamuda, the group’s outlay for the 75% equity interest in Wessex Winchester Propco via VB II will amount to £52 million, which will be funded via foreign currency-denominated bank borrowings.
Regarding the £257 million purchase consideration, Gamuda said it was arrived at on a willing buyer, willing seller basis, considering market values of comparable assets at £809 per sq ft.
With strong demand for top-class ESG buildings, coupled with an acute lack of supply, Gamuda expects to double its equity investment from the asset upon disposal within five years.
“Acquiring the Winchester House presents a strategic opportunity for Gamuda, as we substantially expand our property development footprint to the Building Research Establishment Environmental Assessment Method (BREEAM) outstanding rate properties, which are few and far between in London.
“It is a compelling site in a highly sought-after location, as this commercial office project is situated in the heart of the City of London, the square mile that is the financial centre of the world and increasingly a mega-technology hub of the world too,” the group added.
The proposed acquisition, which is not subject to the approval of shareholders or any regulatory authority, is expected to be completed by May 2023.
Shares in Gamuda ended seven sen or 1.71% higher at RM4.17 on Monday (March 27), giving the group a market capitalisation of RM11.09 billion.