GIC Moves In On British Property Market

Source : TODAY, Friday, January 11, 2008

Fresh from bailing out Europe's largest bank UBS with a 11-billion Swiss franc ($14.2-billion) cash injection, the Government of Singapore Investment Corporation (GIC) has taken a 3-per-cent stake in British Land, The Daily Telegraph reported yesterday.

The investment is worth about £138 million ($388 million), based on British Land's market capitalisation of £4.6 billion, according to Bloomberg data.

British Land, founded in 1856, is Europe's largest real-estate company in terms of assets.

It invests in freehold commercial properties including office buildings, retail superstores, shopping centres as well as warehouses and industrial facilities both directly and through joint ventures.

British Land's portfolio is valued at £15.9 billion, of which £7.4 billion is in office buildings, almost all of which are located in London, according to its website.

GIC's investment comes after months of speculation that cash-rich investors would swoop in on the beleaguered real estate market, which has seen property shares tumble by 40 per cent in the past year, The Daily Telegraph reported.

British Land's share price had halved from a high of £17.22 at the end of 2006 on fears of a crash in capital values of office buildings in the heart of London. The shares were hovering at £9.05 at press time yesterday.

British Land was forced to pull the £1.7-billion sale of a stake in its flagship shopping centre Meadowhall last November after the global credit crunch hit, The Daily Telegraph reported.

GIC was said to have been interested in acquiring the stake from British Land earlier in the year.

Instead, it bought a 40-per-cent stake in MetroCentre from Liberty International. GIC also owns 50 per cent of the Westquay shopping centre in Southampton, according to The Daily Telegraph.

GIC, which manages Singapore's foreign reserves worth more than US$100 billion ($143 billion) was established in 1981 to invest and boost the Republic's reserves.

Since then, the company has formed ventures and acquired property in Asia, the United States and Europe to build a multi-billion dollar diversified portfolio of real-estate holdings.