UK real estate investing during COVID-19

UK real estate investing during COVID-19

London based, and Kuwaiti owned, Jade Merchant Bank (“JMB”) continued to invest successfully in UK real estate during the pandemic. Their Investment Director, Stuart Jarvis, reviews their lessons learned.

Real Estate remains a people and a relationship led industry, which was made all the more challenging when meeting those people in person became a proscribed activity. JMB’s first Lockdown deal was the entirely ‘off-market’ acquisition of the £29m BAE Systems campus in Christchurch, Devon, for a UAE based family office. Heavy reliance was put on previously forged relationships, which allowed both buyer and seller to work collegially through the complexities of the acquisition process.

Analysis of Real Estate changed undeniably during the pandemic, with the new question of whether the investment was ‘Covid proof’? With BAE Systems plc on the lease, the acquisition benefitted from a FTSE 100 tenant with a £17.5bn market capitalisation and long-term government contracts. Hindsight was not required to see the value here.

The most striking ingredient to this transaction’s financial success was the role of leverage. More specifically, the Libor swap market. At the time of writing, 5 year swaps for both Libor and Sonia are priced at c. 1.1 - 1.2%. At the time of closing the