Blackstone is in exclusive talks to buy the Broadgate Quarter office complex, EC2, from Hines and HSBC Alternative Investments.
The US private equity giant is expected to pay more than £415m – a 4.95% net initial yield – for the building, should the deal complete.
It has emerged as the front-runner more than two months after Broadgate Quarter originally went under offer to a Chinese investor which failed to complete the purchase.
The breakdown in talks raised concerns that the City market would prove vulnerable to turbulence in emerging markets and an anticipated retreat of Chinese investors.
While the pricing on the latest deal is some way below the £455m – a 4.5% yield – originally agreed by the Chinese investor, the deal still reflects a huge premium to the £290m paid for the building by Hines and HALE in 2012.
It will also boost confidence in the City market, which has seen several significant deals agreed in the past fortnight, including 100 New Bridge Street, EC4, 55 Mark Lane, EC3, and 40 Friary Court, EC3, totalling around £220m, with Chinese investors among the purchasers.
The 460,000 sq ft Broadgate Quarter campus, which is split into two phases, has an average unexpired lease term of nine years and boasts a rent roll of £19.4m.
However, it also offers significant asset management opportunities for Blackstone, with law firm Ashurst expected to vacate around 80,000 sq ft in the campus when it moves into the London Fruit and Wool Exchange, E1, in 2018.
Its leases expire in 2019 and 2020.
GM Real Estate is advising Blackstone; Knight Frank and Cushman & Wakefield are acting for the vendors.
