Perennial secures call option to buy 20% stake in Aviva Tower, UK, for £330 mil

SINGAPORE (Nov 29): Perennial Real Estate announced that is has secured a call option agreement for US$4 to acquire a 20% stake in Aviva Tower for £330 million (RM1.83 billion).

In an SGX filing, the company stated that the price was derived based on “as is” market valuation of Aviva Tower of £323 million, without accounting for any potential redevelopment value.

The purchase of the 20% stake will be made through Aroland Holdings which owns a 100% stake in Aviva Tower.

Aviva Tower is a 28-storey office tower which has been granted the approval to be redeveloped into the tallest building in London at 304.94 metres.

The new development 1 Undershaft, will have 73 storeys above ground and four basement levels with over 130,000 sqm of gross floor area of Grade A office space, as well as the highest office space in London.

The developmet will also have over 2,000 sqm of gross floor area of retail, and food and beverage space on basement 1.

Post-development, 1 Undershaft will have a total gross floor area of 154,100 sqm and a net lettable area of  92,975 sqm, trippling the current size of Aviva Tower.

This transaction is considered an interested person transaction, as Aroland is held by HPRY Holdings, an investment vehicle owned by Kuok Khoon Hong, chairman of Perennial, and three other investors.

The Audit and Risk Committee of Perennial views that the transaction is on normal commercial terms and does not prejudice the interests of the company and its minority shareholders.

Kuok will also abstain from any board decision in relation to the exercise of the call option.

Under the call option, Perennial has the right not the obligation to exercise it should Aroland proceed with redevelopment, with Perennial managing redevelopment upon confirmation of execution of redevelopment plans.

“The Call Option provides Perennial with an exceptional opportunity to gain access into a new developed market and own a piece of prime freehold real estate in the City of London,” says Pua Seck Guan, chief executive officer, Perennial.

“Given that the current transacted value of prime office space in London’s Central Business District averages £1,500 per square feet NLA, the redevelopment scheme will create development value and Perennial will enjoy the upside potential via the Call Option,” he adds.

Shares of Perennial closed 0.5 Singaporean cent higher at 82 cents on Monday (Nov 28). — theedgemarkets.com.sg