HSBC Alternative Investments is in advanced talks to buy Brindleyplace in Birmingham in what would be the largest office deal in the city.
The investment arm of HSBC’s private bank has agreed to buy five buildings at the complex from Lone Star and Hines Global REIT for £260m – a yield of 6%.
A deal has been agreed in principle, although the assets are not formally under offer because HSBC is still speaking to clients in its wealth management division about bringing them into a club to make the investment.
If completed, the deal would be a major boon to the UK regional markets as overseas investors look to take advantage of the relatively high yields on offer and the devaluation of sterling. For Birmingham it would also be a further boost, with confidence brimming at the prospect of HS2 becoming operational from 2026.
Birmingham’s largest investment transactions: offices
| Date | Property | Price (£m) | Buyer | Seller |
|---|---|---|---|---|
| Q4 2016 | Brindleyplace | 260* | HSBC Alternative Investments | Hines/Lone Star |
| Q1 2016 | Three Snowhill | 200 | M&G Real Estate | Ballymore Properties |
| Q3 2010 | Brindleyplace | 190 | Hines/Moorfield | Brindleyplace Partnership |
| Q1 2007 | City Centre House | 161 | Scottish Widows | PRUPIM |
| Q4 2006 | 1 Colmore Plaza | 150 | Carlyle | Abstract Land |
Hines and Lone Star, which hold the asset on a 60:40 basis respectively, originally put the offices up for sale in last September for £285m – a 5.5% yield. A sale around the asking price to a Middle Eastern buyer fell through in February and Brindleyplace was withdrawn from the market. The new price reflects a discount of around 5% on the original asking price.
Three, Four, Five, Six and Nine Brindleyplace cover 638,400 sq ft in total, including more than 470,000 sq ft of offices plus ground-floor swaps and leisure space, an 890-space multi-storey car park, a health club and a prominent café in the square that is let to Costa Coffee.
Occupiers include Deutsche Bank, RBS and Deloitte, which accounted for 47% of the total rental income when Brindleyplace was first put up for sale. The average rent for office space is just £24.50 per sq ft compared with prime rents in the city of £30 per sq ft.
Birmingham’s largest investment transactions: all sectors
| Date | Property | Price (£m) | Buyer | Seller |
|---|---|---|---|---|
| Q1 2016 | Grand Central | 345 | Hammerson | Birmingham City Council |
| Q2 2013 | 1/3 stake – Bullring | 307 | Hammerson/CPPIB | Future Fund |
| Q4 2016 | Brindleyplace | 260* | HSBC Alternative Investments | Hines/Lone Star |
| Q3 2009 | 1/3 stake – Bullring | 210 | Future Fund | Land Securities |
| Q1 2016 | Three Snowhill | 200 | M&G Real Estate | Ballymore Properties |
*if deal completes
Moorfield and Hines Global REIT bought the five buildings from the Brindleyplace Partnership in 2010 for £190m with Moorfield selling its stake on to Lone Star as part of a £1bn portfolio deal last February.
Hines Global REIT is selling its stake as part of a broader wind-down of its $5.5bn (£4.5bn) portfolio and Lone Star is starting to divest assets from its $6.6bn Lone Star Real Estate Fund III, which achieved a final close in 2013.
CBRE and Colliers International are acting for Hines and Lone Star.
• To send feedback, email david.hatcher@estatesgazette.com or tweet @hatcherdavid or @estatesgazette
