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December 23, 2012 9:48 pm
China’s sovereign wealth fund is among a trio of Asian investors vying to buy an £800m London office campus from Blackstone, the US private equity firm, in what would be the UK’s highest value property deal since the start of the financial crisis.
China Investment Corporation and government-backed funds from Korea and Malaysia have tabled bids for Chiswick Park, Blackstone’s 1.1m sq ft development, according to people familiar with the process.
The sovereign wealth interest in the property underlines the growing role international investors are playing in London commercial real estate. Buyers from Asia, the Middle East and North America have ploughed billions of pounds into the offices, shops and hotels in the UK capital.
If the asking price is met, the sale of Chiswick Park would also be a fillip to Blackstone. The private equity group bought the property from a consortium of Aberdeen Asset Management, Schroders and Stanhope at the start of 2011 for £480m.
A person with knowledge of the situation said CIC was working with a third party investor.
The $410bn fund acquired Deutsche Bank’s £245m City of London headquarters in November – Beijing’s first direct property investment in the UK – in partnership with Invesco, the asset manager. CIC owns a 9.6 per cent stake in Blackstone, having invested $3bn into the private equity group before its initial public offering in 2007.
The Korean and Malaysian bids are both understood to involve consortiums of sovereign wealth and pension funds from the respective countries.
Chiswick Park is also rumoured to have attracted interest from a number of Canadian pension funds and UK institutional property investors. However, it is unclear whether they have yet tabled formal bids.
Blackstone and its advisers, CBRE, declined to discuss the process.
Overseas investor interest in the London office market has risen strongly in the past 18 months. The combination of stable yields and the kudos of owning property in the European financial centre have kept the prices buoyant in spite of the problems in the eurozone.
Earlier this week, the government of Azerbaijan confirmed it was buying a £180m office block in St James Street.
Deal flow in the UK capital has been so high that the city now accounts for three-quarters of the country’s entire commercial property market by value, according to recent research from CBRE. Asian investors have made up the largest foreign buyer group coming into London, accounting for 45 per cent of all deals by value in the City during 2012, according to Cushman & Wakefield, the property advisory group.
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