CPPIB and Hermes Agree to Forward-Purchase London’s South Bank Tower

By Adriana Pop, Associate Editor

London—Canada Pension Plan Investment Board (CPPIB) and UK asset manager Hermes Real Estate have agreed to acquire part of London’s mixed-use South Bank Tower from a joint venture comprised of Jadwa Investment and developer CIT Group. The financial terms of the transaction were not disclosed.

Scheduled for completion between October 2015 and May 2016, South Bank Tower will offer approximately 269,000 square feet of office and retail space, as well as 191 residential apartments.

As part of their 50/50 London partnership, the buyers will be purchasing the property’s offices and retail elements, along with the residential ground rent income.

Previously known as King’s Reach Tower, the South Bank Tower mixed-use development designed by Kohn Pedersen Fox Associates is located in a thriving part of London’s Riverside, which is attracting both residential and commercial occupiers.

According to Chris Taylor, chief executive of Hermes Real Estate, this area of the city, between Westminster Bridge and Tower Bridge along the South Bank, is rapidly transforming into a destination of choice for major tenants, due to its proximity to excellent infrastructure, its attractive environment and access to a wide variety of retail, leisure and cultural venues.

“We are pleased to complete the acquisition of a mixed-use property which complements CPPIB’s London office portfolio. We look forward to further expanding this venture alongside Hermes to acquire high quality properties in Central London,” Wenzel Hoberg, managing director and head of Real Estate Investments Europe for CPPIB, says.

“We are very pleased with the deal we have completed with Hermes to pre-sell all the commercial space at South Bank Tower. Having already exchanged contracts on 132 of the 191 apartments without an official ‘launch’ yet, we are absolutely delighted with progress. Our residential marketing suite is due to officially open this September. The presale of the commercial parts of the building further cements the success of the project for us,” adds George Kyriacou, managing director of CIT Developments LLP.

CBRE advised Hermes Real Estate on the transaction.

Canada Pension Plan Investment Board is a professional investment management organization that invests in public and private equities, real estate, infrastructure and fixed income instruments. Headquartered in Toronto, the entity is governed and managed independently of the Canada Pension Plan and has offices in Hong Kong, London, New York City and São Paulo. At March 31, 2014, the CPP Fund totaled C$219.1 billion (approximately $200.7 billion) of which C$25.5 billion (approximately $23.35 billion) represents real estate investments.