The Week The Investment Market Exploded
It has been bubbling away nicely for a while now, but this week, the London and UK real estate investment market took off.
A number of huge London offices either sold or went under offer, as did a major student housing portfolio. A £1B fund was put up for sale as managers gained confidence that large portfolios would find a buyer, and the imminent sale of a large shopping centre in Leeds showed liquidity returning to a battered part of the retail sector.
In London, the New South Wales Treasury Corporation is in talks to buy the City HQ of Deutsche Bank for around £950M, React News reported. Lendlease is investing in real estate around the world on behalf of TCorp, as it is known.
The deal would represent a yield of 3.75%, React said, and the weight of money chasing the deal has pushed the price well about the £850M the building was expected to fetch when it was put up for sale through Savills last year.
Deutsche’s new HQ at the 564K SF 21 Moorfields is owned by and currently being developed by Landsec. Deutsche will take 469K SF of the space when the building is completed next year.
Elsewhere in London, Singaporean investor Ho Bee Land confirmed that it had bought the 406K SF Scalpel office tower in the City for £718M, a 4% yield. The figure is less than the £800M that had been reported as the price tag for the building.
The building is owned by U.S. insurance company WR Berkley, which is also the largest tenant, occupying about 100K SF.
In the student accommodation sector, Equitix Investment Management is recapitalising a UK student accommodation portfolio at a value of £1.3B, React reported. The investment manager is buying out the other investors in a 21-asset, 13,000-bed portfolio managed by Arlington Advisors. The deal will be seen as a vote of confidence in the post-pandemic recovery of the UK student accommodation sector.
In retail, Hammerson is in talks to sell the 916K SF Victoria Gate and Victoria Quarter shopping centres in Leeds to a German-based company called Redical Holdings. The £120M price is a lot less than the circa £300M Hammerson paid for the centres in 2016, but it is a sign of returning liquidity in a sector that has been battered in the last few years.
The uptick in big sales has encouraged other companies to bring large portfolios to the market. Fund manager Nuveen has put an entire fund, the Janus Henderson UK Property PAIF open-ended fund, up for sale, CoStar reported.
CBRE has been appointed to market the assets in the fund, which have a value of £1B. The assets are in a mix of sectors and spread across the UK, with a concentration in the south east. It is the first time a UK manager has put an entire open-ended fund up for sale.
