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Sovereign wealth fund buys €500m London office tower

The Kuwait Investment Authority has acquired the Willis Building from British Land, taking advantage of the “quieter market conditions” to buy the tower at discount.

St Martins, the UK-based property vehicle for the Kuwaiti sovereign wealth fund, the Kuwait Investment Authority, has stepped in to acquire a 23-story tower in Central London from property company, British Land.

The sovereign wealth fund has bought the asset for €500 million ($786 million) at a time when transactions in London have slowed. Prices in the City are down 20 percent compared to 12 months ago.

Real estate broker James Beckham, head of City investment at King Sturge, which advised St Martins, said in a statement St Martins had “struck at the right time” to acquire the trophy building. “Undoubtedly, foreign investment in the UK, much of it through sovereign wealth funds, will be one of the main lifesavers to see London through the market downturn.”

The acquisition will yield 5.7 percent a year, according to the statement. Designed by Sir Norman Foster, the building comprises a 23-story office tower, together with a low-rise building, totaling approximately 504,000 square feet of space. It is let to insurance company, the Willis Group, as their global headquarters, for 25 years at a rent of £52.50 per square foot.

The Kuwait Investment Authority, a commodity sovereign wealth fund, was created in 1953 from oil revenues and was the world's first sovereign wealth fund to be launched. Its fund is estimated to be worth around $250 billion. British Land is seeking to recycle capital within its City portfolio.