Brookfield Office to Buy London Properties for £518 Million

on Jun 20, 2012
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Brookfield Office Properties Inc. (BPO), the owner of New York’s World Financial Centre and other major office properties in the U.S., Australia and Canada, has agreed to buy buildings in the City of London financial district for £518 million. With its first U.K. deal in two years, Brookfield purchases four assets totalling 884,000 square feet, which are being acquired at an initial yield of 6 per cent.

The major assets Brookfield Office agreed to acquire include 125 Old Broad Street, which is a completely redeveloped, class A, 328,000-square-foot, 26-storey office tower at the site of the former London Stock Exchange. Along with two joint venture partners, the company will acquire a 50 per cent stake in this building. Brookfield’s purchase also includes 99 Bishopsgate, which is a 339,000-square-foot, 26-storey office building. The property is adjacent to the 100 Bishopsgate development, owned by Brookfield and Great Portland Estates in a 50/50 joint venture. Brookfield Office also agreed on the purchase of Leadenhall Court, a 109,000-square-foot office building.

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Other smaller assets included in the acquisition are 1 Puddle Dock and buildings on Shoreditch High Street adjoining Principal Place. Brookfield also purchases the Principal Place development site, located between the Liverpool Street and Shoreditch High Street rail stations. For its planning consent has been granted for a 599,000-square-foot office tower, a 51-storey, 237,000-square-foot residential tower and ancillary retail.

!m[](/uploads/story/107/thumbs/pic_1_inline.png)Brookfield Office expects to complete part of the transaction including Principal Place, 99 Bishopsgate and smaller assets by 30 September, while the acquisition of Leanden Hall Court and 125 Old Broad Street is likely to be closed by June 2013. Explaining the quick transaction and the choice of a buyer, Hammerson CEO, David Atkins, said his company had about 30 offers from prospective buyers for all or some of the properties for sale, but Brookfield “was able to agree to a deal and sign it in two weeks.”

Commenting on the company’s latest purchase, Brookfield’s president and Chief Investment Officer, Dennis Friedrich said: ”This transaction is a unique opportunity for Brookfield Office Properties to acquire a portfolio of top-quality office assets and a well-located development site in the London market.”
For its part, the seller, Hammerson (HMSO) is refocusing on retail. Among other things, the London-based real estate company will use the proceeds of the sale to further its Les Terrasses du Port retail development in Marseille, which will open in 2014, and the refurbishment of the Queensgate shopping centre in Peterborough, England.

“We have been able to achieve our goal of becoming a pure retail business earlier than anticipated by arranging a single transaction for the majority of our London offices,” said Atkins. “In our strategic review announced earlier this year, we identified the opportunity to enhance returns by focusing our energy and capital on the successful sector of retail,” he added.

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