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A private Hong Kong investor has sold a large Canary Wharf office building with a big chunk of upcoming vacancy at below the price it paid just four years ago.
U.S. investor Spear Street Capital is paying Cheung Kei £380M for the 556K SF 20 Canada Square, React News reported. The deal represents a yield of 5.65%.
Cheung Kei paid Brookfield £410M for the building in 2017, and it was hoping to sell it for £428M, React said.
The two main tenants in the building are BP, which leases 244K SF, and McGraw Hill, which leases 243K SF. But BP has agreed to move to Blackstone’s Cargo building when its lease at 20 Canada Square expires in 2024, which means there will be a significant chunk of space to lease at the building in the near future.
Cheung Kei is a vehicle controlled by Hong Kong investor Chen Hong Tian, and it made a big splash in Canary Wharf in 2017 when it also bought 5 Churchill Place from Saïd Holdings for £270M.
It is not the only Asian investor to sell at a discount to its purchase price in the district. Chinese investor HNA sold two Canary Wharf buildings at sharp markdowns in 2019.
The need to re-let space and potential to improve value by doing so fits with the ethos of Spear Street. The San Francisco-based firm describes itself as specialising in unique or tricky office buildings, and it has invested more than $9B (£6.6B) since it was founded by John Grassi in 2001.
The deal could signal a broader push into the UK for the company. Bonaccord Capital Partners, a division of giant fund manager Aberdeen Standard Investments, made a strategic investment in Spear Street in July. The companies described it as a passive, non-voting investment made to help Spear Street grow its business.
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