The National Pension Service of Korea (NPS) is poised to complete the £772.5 million ($1.29 billion; 863 million) purchase of HSBC’s London headquarters office in Canary Wharf in a sale and leaseback deal.
The purchase is the largest single asset investment undertaken by the $200 billion pension during a particularly bullish second half of the year, and one of the largest single asset deals worldwide in 2009. The deal is expected to complete by the end of the year. JP Morgan Asset Management advised NPS.
Earlier this month, NPS purchased an office at 88 Wood Street in the City of London from ING Real Estate Investment Management for £183 million and a 50 percent stake in Grosvenor Place in London’s West End, from clients of Invista Real Estate Investment Management for approximately £85 million. Those deals were conducted through a mandate awarded to London-based Rockspring Property Investment Managers, awarded in September.
While NPS was not immediately available for comment, it is widely understood that the pension has targeted prime real estate in mature capital city markets as a way of investing out of more traditional equity and bond assets and into other sectors it deems more lucrative. A report by London’s The Times highlighted that NPS has approximately $16 billion in profits from investment gains this year alone in which to invest with.
The sale of the HSBC building will be third time it has changed hands in three years after it was sold by HSBC to Metrovacesa for a record £1.1 billion in 2007, and then back to HSBC on a discount a year later after the Spanish property company ran into financial difficulties. An announcement by HSBC confirmed the bank made a gain of approximately £350 million through its sale.
NPS will purchase a 100 percent shareholding in a holding company which owns the 998-year lease on the building while HSBC remains a tenant for another 17.5 years at a rent of £46 million a year.