Blackstone nears £600m Adelphi sale
Blackstone is close to agreeing a deal to sell the iconic Adelphi building to one of the world’s richest men.
Amancio Ortega’s investment vehicle Pontegadea has been selected as the preferred party to buy the 330,000 sq ft office building at 1-11 John Adam Street, WC2.
Although Adelphi is not formally under offer the deal is expected to progress to this stage in the next few days.
Blackstone is close to agreeing a deal to sell the iconic Adelphi building to one of the world’s richest men.
Amancio Ortega’s investment vehicle Pontegadea has been selected as the preferred party to buy the 330,000 sq ft office building at 1-11 John Adam Street, WC2.
Although Adelphi is not formally under offer the deal is expected to progress to this stage in the next few days.
Blackstone appointed Eastdil Secured and Knight Frank to sell the building in April for £600m, reflecting a 4% yield and it is understood that a deal has been struck at just below his price.
Retail mogul Ortega is the owner of Inditex, the parent company of brands including Zara and Bershka, and is the world’s sixth richest person with an estimated wealth of around $75bn (£56.5bn).
He already owns a substantial property portfolio through Pontegadea and had been in the running to buy Goldman Sachs’ new £1.3bn London headquarters, but ultimately lost out to current Korean pension fund NPS in the ongoing process.
Ortega’s most recent reported UK property purchase was his £48m acquisition of the Apple store in Glasgow last year.
If completed the Adelphi disposal would be the largest sale in the West End this year. It would be a further boon for the central London investment market which last week saw a deal agreed for both the Goldman headquarters and Tishman Speyer and PSP’s £450m Verde in Victoria with Deka.
Many major overseas investors continue to see relative value in the UK compared to other major cities in continental Europe where prices have risen markedly over the past year and expect London to continue to be an economic powerhouse, despite political instability caused by Brexit.
Adelphi is fully let and its largest tenant is online music giant Spotify, which leased 104,133 sq ft last summer and is close to moving into its space. The rest of the building is let to tenants including Condé Nast, The Economist, Finsbury, PetroChina, A T Kearney and Shiseido.
The grade II 1930s Art Deco building has views over the River Thames and Victoria Embankment. Blackstone bought the building at the end of 2012 from Dubai investment fund Istithmar for £265m, reflecting a yield of around 7.5%. Since then Blackstone has completed an extensive refurbishment of the entire building, investing more than £80m.
Blackstone has been steadily making disposals from its central London office portfolio over the past year, having sold assets including Lacon London, WC1, last August for £285m to Al Ain Properties, Devonshire Square, EC2, last October to WeWork for around £600m, and Cannon Bridge House, EC4, for £248m to FG Asset Management and Valesco Group in March.
The company still has a substantial portfolio in the City however, most of which it built up between 2012 and 2015. These include 125 Old Broad Street, EC2; Times Square, E1; 125 North Colonnade, E14, and Broadgate Quarter, EC2.
In May Blackstone’s head of European real estate James Seppala told EG that he expected the company to build its London offices portfolio back up in the near future: “I hope we will be investing more in London offices over the next several years because we see the leasing success if you own good real estate and are prepared to invest into the asset, as well as the liquidity of those assets, once stabilised.”
Watch a tour of the Adelphi building
To send feedback, e-mail david.hatcher@egi.co.uk or tweet @hatcherdavid or @estatesgazette
