By Deirdre Hipwell and Jennifer Rigby
$200bn state fund teams up with Rockspring to start $3bn spree as China invests in Songbird
South Korea’s giant state-backed pension fund has joined a wave of Far Eastern money ploughing into central London property.
The National Pension Service of Korea (NPS) – the world’s fifth-largest pension fund – has instructed Rockspring Property Investment Managers to buy landmark properties in central London on its behalf.
NPS has a global strategy to spend $3bn on property in London, New York, Tokyo and Sydney in 2009.
In London the newly established Rockspring-managed NPS Central London Property Limited Partnership has immediate and ‘significant’ spending power and is targeting average lot sizes of £150m and above.
The partnership can agree deals with or without debt to ease their progress and take advantage of historically low prices.
It is thought to be the first time NPS has invested directly in UK property and demonstrates the strong relationship NPS has with Rockspring.
Robert Gilchrist, chief executive of Rockspring, said: ‘Winning this mandate is a reflection of our strong track record in managing funds in many and varied market conditions over the last 25 years.
‘We will be working hard to source exceptional opportunities in the central London office and retail market that will deliver the required returns for our investor. Given the level of equity available to the fund and its ability to be flexible on gearing for each transaction, we believe the fund will stand out as an attractive potential purchaser in a market that still has limited availability of debt.’
NPS has invested in the Rockspring TransEuropean IV fund in the past.
NPS was established in 1988. It has $200bn reserves and a target fund size of $440bn by the end of 2012.
The new fund is already thought to be in talks to buy two central London buildings as tipped by Property Week – 88 Wood Street and a 50% interest in 40 Grosvenor Place – for a total of £260m, but declined to comment on individual investments.
Knight Frank will advise on office investment, Jones Lang LaSalle on retail.
The South Koreans are joined by China Investment Corporation, which last week invested in Songbird, the struggling majority owner of Canary Wharf Group.
Also this week, Bank of China was in detailed talks to occupy Goodbody Private Clients’ entire 117,500 sq ft One Lothbury in the City of London, with an option to buy the building at a later date. The bank – which only occupies 48,000 sq ft at Eagle House on 90 Cannon Street – is rapidly expanding into the UK residential mortgage market.
Finally, a Malaysian investor has exchanged contracts for one of the biggest investment deals in the West End so far this year, agreeing to buy Windsor House in Victoria for more than £110m – a yield of around 5.95%.
JLL is advising the vendor, a client of Bank of Ireland. (Deirdre Hipwell and Jennifer Rigby, Property Week) http://www.propertyweek.com/story.asp?sectioncode=36&storycode=3147964
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