Ares is in talks to buy Schomberg House close to Buckingham Palace in London's West End for around £50 million, CoStar News understands, as US investors continue to be particularly dominant investors in real estate in the capital.
Best bids were called last week for the 37,300-square-foot building at 80-82 Pall Mall, which is being sold by Swiss Investor AFIAA via RX London.
PGIM Real Estate, the property investment manager of Prudential Financial, sold the building to AFIAA in 2017 for £58.25 million, a net initial yield of 4.3%. The building is leased to Permira.
US private equity group Ares has been one of the most active investors in London offices recently. This month it has completed its acquisition of the majority of Shaftesbury Capital’s Charlotte Street "Lifestyle" portfolio in London's Fitzrovia for £60.5 million or a 5.56% net initial yield. It has also exchanged on the acquisition of the long leasehold interest in 25 Charterhouse Square, EC1 on behalf of one of its real estate funds, from Helical for £43.5 million.
At the beginning of the year Royal London Asset Management Property sold a 1.2 million-square-foot portfolio of industrial and logistics assets to Ares Management Real Estate funds for around £200 million.
Returning private equity investors have been behind much of the activity in a still-quiet London investment market. Colliers reported in March that private equity had accounted for 11% of acquisitions in the London capital market year-to-date, and for a quarter of deals under offer.
US private equity has been the busiest. BNP Paribas Real Estate reports that total UK inward investment from US-based buyers recorded a 64% year-on-year increase from £1.9 billion in the first quarter of 2023 to £3 billion in the first quarter of 2024, with London the main target.
The standout example has been Blackstone's completion of the acquisition of Breitling's store on New Bond Street for £227 million.
Elsewhere in the West End, a private Asian investor is understood to have exchanged to buy 38 Grosvenor Square from Grosvenor for in excess of £40 million. Knight Frank is advising the latter. The Grade II* listed 18th century Townhouse connects to a modern mews extension on Adam’s Row. It comprises 27,278 square feet arranged over lower ground, ground and three upper floors and was the Indonesian Embassy's home until 2017. It is being sold with the potential for multiple uses including office, private member’s club, hotel or serviced apartments as well as other commercial uses.
Separately, UK, Germany and France-focused real estate operating partner Arax is buying 11-14 Windmill Street, Databricks' new home in the West End, from CBRE Investment Management for around £40 million. Databricks recently signed for 29,000 square feet of the building for its European headquarters at a rent of circa £65 per square foot.
Elsewhere, investment manager Greycoat has exchanged to buy 120 Aldersgate Street for around £23.25 million from L&G. The 45,089-square-foot building is multilet to four tenants with two floors vacant. RX London is advising L&G while Fineman Ross acts for Greycoat.
Greycoat, which is acquisitive at present, is understood to have ended separate talks to buy 77 Kingsway, but remains in discussions to buy 55 Strand and 140 Leadenhall Street. Knight Frank is advising Aviva Investors on the sale of the 45,000-square-foot 140 Leadenhall Street seeking £29.7 million or an 5.61% net initial yield.