Farnborough: Business Park sold in major £174.6m cash deal

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TBM Team

Frasers Centrepoint has entered into a sale and purchase agreement to buy Farnborough Business Park from Harbert and XLB for £174.6 million in an all-cash acquisition as the investor moves to increase its exposure in Europe.

Farnborough Business Park is a 46.5-hectare freehold development comprising 14 commercial buildings with a total net lettable area of 555,000 sq ft in the Thames Valley.

The deal, which is due to complete by the end of January, is structured as a 50:50 joint venture between two Frasers entities, Frasers Property International and Frasers Commercial Trust. The purchase price was arrived at following a valuation from BNP Paribas Real Estate of £175.05m.

Frasers said it would consider redeveloping parts of the business park to increase its lettable area.

Frasers views the development as a defensive asset underpinned by leases with a long WAULT of 8.3 years and a diversified tenant base of 36 tenants, including the likes of Time Inc, Fluor, INC Research UK, Aetna Global Benefits and a unit of Regus.

Designed as an integrated business campus with retail, hotel and other amenities, its occupancy is running at 98.1%, with healthy tenant retention rate of around 89%.

Panote Sirivadhanabhakdi, group CEO of FCL, said: “The acquisition is in line with the Group's strategy to grow overseas and recurring income sources in markets that we are familiar with, and FCL has been operating in the UK for over 15 years.

“FBP is complementary to the three other business parks that the Group owns in Thames Valley. Having a larger presence within the cluster enhances our ability to offer a wider range of space solutions to meet customers' expansion and consolidation needs, and allow us to drive operational efficiencies.”

Bobby Chin, chairman and independent non-executive director of the Manager, said: “FCOT will be expanding its investment mandate to include Europe - with an initial focus on the UK - to diversify FCOT’s investments beyond existing markets of Singapore and Australia. The UK is one of the largest economies globally and its commercial real estate market is vast, well-established and institutionalised, which we consider to be important and attractive characteristics. Tapping into the UK market will enhance our ability to provide diversified, balanced and long-term growth for FCOT unit holders.”

Jack Lam, chief executive officer of the Manager, added: “FBP is an award-winning business park with strong fundamentals including a well-connected location, good building quality, a high occupancy rate, long-dated leases and well-established corporate tenants; and its addition will add quality, defensiveness and diversity to FCOT’s portfolio. In addition, based on the contemplated financing plan involving a combination of debt and equity, the Acquisition is expected to be DPU-accretive. Overall, the Acquisition will be beneficial to FCOT on many fronts.”

“The expansion of FCOT’s investment mandate creates further synergistic alignment with FCL, as Europe is currently FCL’s third largest market by asset size, behind Singapore and Australia. In support of FCOT’s expanded investment mandate, FCL has also granted FCOT a right of first refusal over its office, business space and business park assets in Europe including the UK. Combined with existing pipeline assets in Singapore and Australia, the current visible pipeline for FCOT totals more than S$4 billion in value.”

In September Frasers Property International, a subsidiary of Frasers Centrepoint, confirmed it had entered into sale and purchase agreements with Oaktree Capital Management to acquire a portfolio of four UK business parks for £686m, as well as a separate deal to buy the Maxis business park in Bracknell for £57m subject to certain conditions.

The acquisition comprised 4.9m sq ft of built area across four freehold business park assets, including the 1.5m sq ft Winnersh Triangle in Reading (sold for £365m); Chineham Park, Basingstoke (£142m); Watchmoor Park, Camberley (£42m); and Hillington Park in Glasgow (£137m).

Separately, Frasers Property also entered into a conditional agreement with Oaktree to acquire another business park, Maxis, Bracknell, subject to conditions relating to net operating yield and Maxis achieving an occupancy of at least 95%. If the conditions in the Maxis agreement are satisfied, completion of the acquisition will take place no later than 20 working days after June 29, 2018.

CBRE advised the vendors.

Source: CoStar

TBM Team