Swire Properties, the biggest landlord in Island East, has acquired a 20 per cent stake in the company that recently bought PCCW Tower in Taikoo Place. At the same time, Swire has given up its pre-emption buying right for the office block. Managing director Keith Kerr said the transaction allowed Swire Properties to maintain 'a strategic stake in the building in partnership with a prominent investment group'. Last month, PCCW unit Pacific Century Premium Developments (PCPD) provisionally agreed to sell the 43-storey building for $2.8 billion to Richly Leader, which is ultimately owned by a closed-end property fund managed by the regional property investment arm of United States-based group Prudential Financial. However, Swire Properties, the original developer of Taikoo Place, had to first be given an opportunity to exercise its priority purchase option for the 620,000 square foot building. Analysts had said Swire was unlikely to exercise that option because the sale of the tower would not have any adverse impact on the company. Swire Properties did not reveal how much it paid for the stake in Richly Leader but analysts said the company would enjoy a share of the five-year rental guarantee of $13.33 million a month, or a yield of more than 5.7 per cent based on the $2.8 billion acquisition cost. The guaranteed rental return will be given by PCPD. 'The deal is definitely good for Swire Properties as the developer's strong presence in Island East remains unchanged,' said Anthony Wu Yat-wai, property analyst at Lehman Brothers. The deal also raises the possibility of future co-operation between Swire Properties and the closed-end property fund managed by Pramerica Real Estate Investors (Asia) as the latter expands its investment in Asia. A spokeswoman at Swire Properties declined to comment on potential co-operation but said Richly Leader's core asset was PCCW Tower. Pramerica did not return calls. DBS Vickers property analyst Winnie Chiu Wing-yin said the move indicated Swire Properties was keen to protect its interest in Island East. 'The purchase will prevent Swire Properties from losing its grip in Quarry Bay,' she said. It is, however, difficult to assess Swire's short-term benefit from the deal given that the price it paid for the stake remains publicly unknown. The announcement came ahead of a groundbreaking ceremony tomorrow for Swire's four billion yuan retail-hotel-office complex in Guangzhou, Taikoo Hui Guangzhou Cultural Plaza. That project has been in limbo since 2002.