UAE investor makes largest UK office acquisition outside London this year

Gulf Islamic Investments (GII) has acquired Priory Court & The Lewis Building in Birmingham for close to £140m (€158m), in what has been described as the largest UK office transaction outside London this year.

GII, which advises the investments of the Abu Dhabi royal family, acquired the multi-let office property from UK insurer Legal & General’s real assets investments arm.

The asset includes two connected buildings: Priory Court, which is let to Birmingham Magistrates Court until 2034, and The Lewis Building, which LGIM Real Assets has refurbished and added an additional floor to, providing 12,464sqft of extra space.

LGIM Real Assets acquired the buildings in 2014 for its UK Property Income Fund II, which raised £138m in 2013. The fund currently holds 11 properties worth approximately £351m.

Since completing the refurbishment, LGIM Real Assets introduced new tenants, including the Ministry of Justice, Spaces, Business Growth Fund and Freightliner.

Will Edwards, senior fund manager at LGIM Real Assets, said: “The sale of Priory Court & The Lewis Building marks the successful completion of the asset business plan and is testament to the skills and capabilities of our team of asset managers.

During the hold period, the fund has repositioned and re-let The Lewis Building, setting a new high rental tone, and the completion of its sale will deliver strong returns to the fund.”

GII was created through the merger of Union National Financial Consultancy and Allied Investment Partners, two companies established to manage and advise on the private investments of the Abu Dhabi royal family. It has already made other investments in UK real estate.

Pankaj Gupta, co-founder and UAE chief executive of GII, said: “Despite the challenging times and the uncertainty surrounding Brexit, GII is immensely delighted to expand its investment portfolio in the UK through another high-quality long income yielding asset for its clients endorsing our strong belief in UK real estate market.

“This transaction reflects well on GII’s growing expertise in acquiring such marquee assets and positions us as an active and major real estate player in the region.”

CBRE advised LGIM Real Assets on the transaction. Nick Woodward, head of CBRE’s Birmingham investment team, said: “Despite the political uncertainty, this transaction illustrates the sustained appeal of the UK property market, with Birmingham a key target for investors due to the strength of its occupational market and significant growth potential over the next five to 10 years.”