‘There’s Plenty Of Money Out There.' 3 £900M-Plus Sales Are On The Go In London Right Now
After a pandemic-affected couple of years, central London office investment is expected to improve in 2022, with Knight Frank predicting £10.5B will be invested in the UK capital, up 17% on 2021.
A big chunk of that could come from just three huge assets currently on the market and at various stages of the sales process. All have their own idiosyncratic elements to keep an eye on. Here’s what you need to know.
One And Two Southbank Place
Third time lucky? Almacantar, the developer of the 572K SF Southbank Place office scheme has tried to sell it twice before, and has now brought it back to the market for £935M, the Financial Times reported. The 272K SF One Southbank Place is leased to Shell as its UK headquarters, and the 300K SF Two Southbank Place is leased to WeWork, one of its largest global offices.
In 2019, an £875M sale was pulled due to the volatility around WeWork’s failed September IPO. A deal to sell the building to Blackstone in early 2020 was kiboshed by the pandemic. Now, with WeWork having completed a successful listing, the sale will be seen as a test of the flexible office giant’s covenant. “There is plenty of money out there in the market,” Almacantar Chief Executive Mike Hussey told the FT.
The market will watch with interest to see what Almacantar does next after the sale. It has just sold its office scheme at Marble Arch, is selling off remaining flats at Centre Point in the West End and is looking to refinance the construction loan on the residential element of its Marble Arch project. In that sense, it is coming to the end of the development cycle on its current schemes, and it hasn’t taken on a new development in some years.
When Hong Kong-based CK Asset Holdings bought the London HQ of UBS at 5 Broadgate in the City of London for £1B in 2018, it looked like a standard deal with an Asian investor buying a blue-chip property for a long-term investment. Instead, just four years later, it is selling the building for the kind of profit that would have an opportunity fund salivating. South Korea’s National Pension Service is close to completing a deal to buy the building for £1.2B. The 700K SF 5 Broadgate is leased to UBS until 2035.
21 Moorfields
Strong investor interest means that the new London HQ of Deutsche Bank, currently being built by Landsec at 21 Moorfields in the City, could be sold for as much as £1.2B, CoStar reported last month, compared to an initial guide price of about £900M. A sale at that price would represent a yield of about 3.5%. Alongside the sale of UBS’ HQ, it represents a vote of confidence from investors that financial services firms are going to carry on occupying big chunks of office space for the long term.
The 560K SF 21 Moorfields will house 6,000 Deutsche staff when it is completed in late 2022 or early 2023, with the bank having taken a 25-year lease on 469K SF in the building. It is decanting staff from several other London locations.
