IN-DEPTH: Tishman Speyer pays $359m for office building in London
Tishman Speyer has acquired The Point, a 232,772-square-foot office building located in the Paddington area of London’s West End.
THE DEAL
The sales price was £210 million, or £892 per square foot ($359.1 million/$1,526 per square foot). The sellers were WELPUT and Hermes. DTZ and Strutt & Parker represented the sellers, which purchased the asset in 2004 for $220.2 million.
“We have a very positive long-term view of the London office market and we are continuing to seek both development and acquisition opportunities accordingly,” say Tishman Speyer co-CEOs Jerry Speyer and Rob Speyer in a statement. “The Point is an excellent addition to our portfolio.”
The Point is Tishman Speyer’s second London acquisition in 2014, after acquiring the Sainsbury’s corporate headquarters property at 33 Holborn in April. The U.S.-founded firm has been active in London for nearly 20 years, investing approximately $4.5 billion in nearly 5 million square feet of properties during that time period. In addition to The Point and 33 Holborn, other current holdings in London are Sanctuary Buildings and Eland House for which planning consent was recently obtained for a major redevelopment that will deliver 320,000 square feet in early 2016.
THE ASSET
The fully leased 11-floor class A property, known for its distinctive design resembling a ship’s prow, features floorplates of up to 23,000 square feet.Major tenants include the CH2M Hill, A2 Dominion, Everything Everywhere, Cerner Corp. and CB&I.
The property sits beside the Grand Union Canal within the Paddington Basin redevelopment area, close to Paddington Station and two pedestrian bridges. Paddington will serve as a major Crossrail hub, which is expected to make the area even more compelling to potential tenants.
THE MARKET
The London office market has shown a decline in transaction volume since the fourth quarter 2014, which saw $12.78 billion in property change hands, according to Real Capital Analytics. First quarter 2014 had $7.1 billion in completed transactions and second quarter 2014 closed $5.4 billion in transaction volume. The third quarter has so far had announced 15 transactions totaling $1.9 billion. The total sales volume in the 12 months through second quarter 2014 totaled $33.45 billion.
WELPUT purchased the Collingwood House in the sector for $148 million. Another large transaction was The Amerada Hess Building, which sold for $345 million. The buyer was Perella Weinberg Partners. And the Canary Wharf Tower has sold for $1.33 billion to a China Life Asset Management joint venture.
A pending office deal is 25 The North Colonnade, which The Blackstone Group is buying for $282.2 million.
THE PLAYERS
Tishman Speyer is a leading developer, owner, operator and asset manager of first-class real estate worldwide. As of March 31, the firm had acquired, developed and/or managed a portfolio of approximately 130 million square feet with a total value of approximately $66.9 billion since its founding in 1978.
West End of London Property Unit Trust is a closed-end property unit trust. The aim of WELPUT is to provide investors with an exposure to the West End office market.
Hermes Fund Managers is an asset manager based in London and owned by the BT Pension Scheme.
