The 10 Largest UK Deals In A Market Where Volumes Have Tanked

UK real estate investment volume was down 60% in the first half of the year, data from MSCI showed. While £16B was traded, highlighting that some deals are getting done, the sharp rise in interest rates has taken a big chunk out of the investment market. 

Here are the 10 largest deals completed in the first half of 2023, based on MSCI data. They represent a mix of portfolios and single assets across multiple sectors, including the much-discussed office market. 

Blackstone’s Industrial Take-Private

Blackstone showed continued conviction in its favourite asset class by taking private stock market-listed Industrials REIT in a £511M deal. The price paid for the company, which has assets across the UK, was above its share price before the deal was announced but below the company’s net asset value. 

Blackstone’s North West Industrial Buy

That conviction continued with Blackstone’s purchase of 7M SF of industrial assets at Heywood Distribution Park and Trafford Park in the north west of England from Harbert and Canmoor. It paid £480M for the portfolio in April. This deal and that for Industrials REIT were made at the trough of values for industrial assets, which have since started to recover. 

Sainsbury’s Supermarket Buyback

In March, Supermarket Income REIT agreed to sell a portfolio of 21 stores back to retailer Sainsbury’s for £430M. It had originally bought them from the supermarket in 2000 in a sale-and-leaseback deal. Supermarket Income REIT made a 30% internal rate of return on the deal. 

Lazari's Purchase Of Fenwick Department Store

This deal highlighted how department stores continue to struggle, but investors still have faith in the future of new offices. The Lazari family property company Lazari Investments paid Fenwick £430M for its flagship department store and some adjoining assets on Bond Street in the West End. The 100K SF building is likely to be converted to a mixed-use scheme including offices and potentially a hotel. 

City Developments Ltd. Docks At St. Katharine

Blackstone was a seller here, offloading a longstanding London office investment. Singaporean investor City Developments Ltd. paid £378M for St. Katharine Docks, which comprises 445K SF of offices across several buildings, 70K SF of shops, restaurants and bars, and a 10-acre, 160-berth marina, the only marina in central London. It is less than the £435M Blackstone was going to sell the building for in 2018. It opted to refinance rather than sell the asset at that time. 

Chinachem Buys One New Street Square

This deal, along with CDL’s purchase, shows that Asian investors still have an interest in London offices, although office investment in the first half of 2023 was down 69% to £4B, MSCI data showed. Hong Kong investor Chinachem Group paid Landsec £350M for the 275K SF One New Street Square in Midtown, a price of £1,271 per SF. Deloitte has a lease on the building until 2036, and the sale is part of Landsec’s strategy of selling assets where it can’t add more value. 

Unibail Buys Out Hammerson In Croydon

MSCI had the value of Unibail-Rodamco-Westfield’s purchase of Hammerson’s 50% stake of the assets the duo owned in Croydon town centre at just about £300M. With plans for a £1.4B third Westfield shopping centre in south London now abandoned, Unibail is working up plans for an alternative scheme. 

Shimao Pays Off Debt With Sancroft Sale

In May, Mitsui Fudosan completed a deal to buy the 309K SF Sancroft office building in the City of London for £315M. A redevelopment of an office building near St. Paul’s previously occupied by Goldman Sachs, the building is about 50% leased to occupiers including Convene and law firm Goodwin Proctor. The seller, Hong Kong investor Shimao, is selling assets to pay back debt, Mingtiandi reported. 

Munich Re Buys Into Fen Court

Another deal for a new(ish) London office was the purchase by MEAG, a division of insurance company Munich Re, of a 50% stake in the 435K SF One Fen Court office building in the City of London. MEAG paid Italian insurer Generali £313M for the stake at a yield of 4.39%. The building was completed in 2018. M&G Investments is the largest tenant, occupying 325K SF. 

JV’s Brum BTR Bash

One of the largest deals completed in H1 was a BTR deal outside of London. Harrison Street, Apache Capital and NFU Mutual bought a 722-apartment build-to-rent scheme at Great Charles Street in Birmingham for £302M in a forward purchase deal. It is the largest-ever regional BTR funding deal.