E&O to buy London's Thames Tower and Landmark House for RM309m

KUALA LUMPUR (Jan 19): Eastern & Oriental Bhd (E&O) is adding two more properties to its London portfolio, by acquiring vintage office buildings Landmark House and Thames Tower for a total of £57 million (RM308.94 million as quoted by the company).

In a filing with Bursa Malaysia, E&O (fundamental: 1.5; valuation: 0.6) said its wholly-owned unit Hammersmith Properties Ltd. had on Jan 16 signed a property sale contract with GEMS Hammersmith (Luxembourg) SARL for the purchases.

The agreement was for Hammersmith Properties to acquire two office buildings, namely Landmark House and Thames Tower, collectively covering 1.2 acres of site at Hammersmith Bridge Road. The two buildings, which were constructed in the 1960s, are close to the A4, the principal road connecting Central London to Heathrow Airport.

E&O’s group managing director Datuk Terry Tham said there is potential for a major refurbishment of both office towers.

“This prime freehold parcel in the established commercial hub of Hammersmith, represents a significant refurbishment or redevelopment opportunity for E&O in the future. Subject to the relevant authority approvals, there is the potential to create Grade A office space and residential accommodation in an area, where demand for quality new build property is strong,” he said in a press statement.

The group currently intends to use bank borrowings for 70% of the purchase value, which will raise its pro-forma net borrowings by 68.5% to RM759.93 million, from its audited net borrowings of RM450.99 million for its financial year ended Mar 31, 2014 (FY14), thus potentially raising its net-gearing ratio to over 0.5 times. E&O had a shareholders fund of RM1.52 billion as Sep 30, 2014.

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