(This story has been updated with details of the value of the state when Blackstone first bought it.)
Singapore's City Developments, which is controlled by billionaire Kwek Leng Beng, has completed its acquisition of St Katharine Docks in central London for £395 million from funds advised by US private equity giant Blackstone Group.
The acquisition, which reflects £751 per square feet on the existing net lettable area, bolsters City Developments’ potential recurring rental income, Sherman Kwek, CDL Group CEO, said in a statement to the Singapore stock exchange.
“The current uncertainty in the UK has provided us with strategic opportunities to acquire prime assets and expand our portfolio,” Kwek, the eldest son of the executive chairman, added. Following the acquisition, the Singapore-based developer will own about £1 billion of commercial assets in Central London including office buildings Aldgate House and 125 Old Broad Street.
The properties offer an option to inject the assets into a listed or an unlisted platform at an "opportune time", the group said.
JLL advised CDL.
The sale by the US private equity giant Blackstone, which was advised by BH2, CBRE and Eastdil, is a major boost to the London office market at the beginning of 2023 as it has been starved of major transaction. Other sales of similar size that have completed are ChinaChem's acquisition of Deloitte's London headquarters while Castleforge is close to completing the acquisition of Winchester House from CIC and Invesco for more than £200 million.
Blackstone bought the 23-acre estate, which was built as docks in 1827 and is now central London’s only marina, via the purchase of Nick Leslau’s Max Property Group in 2014. it cost around £300 million as part of a portfolio with a total end value of £710 million. Since then the private equity firm has continued to position the area as a mixed-use development with more than 500,000 square feet of commercial space hosting 80 companies, more than 20 bars and restaurants, 185 berths and 6,500 employees.
Blackstone had previously mulled its sale for £435 million in 2017 but instead opted to refinance the asset. Allianz Real Estate and Brookfield provided the loan in a deal arranged by HFF Real Estate.
It began the process of seeking a buyer again more than a year ago.
The second half of 2022 was one of the weakest periods for London office investment since the 2008 global financial crash but there are many in the market expecting investors, particularly Asian and Middle Eastern investors, to return soon as the bottom of the market nears.
In its provisional figures for the year, BNPPRE says many deals remain under negotiation and deal flow can be expected to pick up again by the mid-point of 2023.
BNPPRE reports central London office investment at £11.5 billion in 2022 with some deals still to come in. The first half totalled £8.1 billion with the second half much lower at £3.4 billion.
Listed on the Singapore stock exchange, CDL is a global real estate company invested in 29 countries and regions. Its portfolio comprises residences, offices, hotels, serviced apartments, retail malls and integrated developments.
In the stock exchange announcement CDL said: "CDL remains a long-term investor in the UK and has confidence in the fundamentals and resilience of the UK economy. London is one of the world’s leading financial centres and home to many multinational corporations, financial institutions, banks and investment firms. Its strong infrastructure, global connectivity and well-established regulatory frameworks are business-friendly, contributing to its status as one of the key financial hubs in Europe."
Blackstone, the world's largest private equity real estate investor, has been more often a seller than a buyer of London offices in recent times. In October 2022 it made a major commitment to the UK capital when it took a massive headquarters on London's prime Berkeley Square and in April 2022 it signalled a commitment to UK regional offices with the £182 million acquisition of The Colmore Building in Birmingham.