AustralianSuper has placed a vote of confidence in the UK's King's Cross development, increasing its stake from 25% to 67.5% in less than 12 months.
The UK government announced on Friday it had sold its 36.5% portion of the project to Australia's largest superannuation fund for £371 million ($755 million). The sale is part of wider plans to help reduce the UK's budget deficit.
Australia's largest super fund also decided to purchase an additional 6% stake from Deutsche Post's DHL parcel service, meaning an overall investment of about $900 million.
AustralianSuper head of property Jack McGougan said the decision to increase the fund's investment in King's Cross "underlines our commitment to acquiring core assets in major international cities with trusted and experienced local partners that will deliver long-term returns for our members in retirement."
"We are pleased to have secured an increased stake in this iconic mixed use development and look forward to working with our co-investors, our advisors TH Real Estate and the Argent development team to create a vibrant, commercially successful neighbourhood in central London," McGougan said.
King's Cross is a 27-hectare central London development comprising homes, offices, schools, restaurants and shops. The site is adjacent to King's Cross Station, which services six London underground lines, and St Pancras Station, from where Eurostar services connect to Paris and Brussels.
The development, with 50 new and refurbished buildings, will have 10.5 hectares of public space including 10 new parks and squares, 20 new streets and three new bridges across the Regent's Canal. It will also have close to 2000 homes. Its occupiers include Google, the Aga Khan Development Network, and University of the Arts London as well as two new schools: Frank Barnes School for Deaf Children and the primary school, King's Cross Academy. The development is due for completion in 2021.
The deal demonstrates global opportunities available to AustralianSuper through its growing size and scale. Last year AustralianSuper spent more than $2 billion of members' assets on direct property investments in the UK and US markets including the acquisition of $1.1 billion stake in Honolulu's Ala Moana Center.
Lazard, as financial adviser, conducted the sale process, supported by real estate advisers Savills and legal advisers Herbert Smith Freehills.
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