London Wall Place owners explore £700m sale

Oxford Properties and Brookfield are exploring options for London Wall Place, EC2, in a process that could lead to a £700m sale, EG understands. As the owners work on refinancing options for the building, potential buyers have already shown interest. The developers are understood to be seeking around £450m for the larger 310,000 sq ft 12-floor building and around £250m for the smaller 190,000 sq ft 16-floor office block, reflecting a 4% yield. Oxford Properties, the real estate arm of Canadian pension fund Omers, entered into a 50:50 joint venture with New York-listed Brookfield to develop the 500,000 sq ft scheme. Brookfield bought an option on the site in 2012 before teaming up with Oxford Properties. The firm acquired the asset as part of a £518m office portfolio from Hammerson, including 99 Bishopsgate, a 50% stake in 125 Old Broad Street, Leadenhall Court and Principal Place. The City of London Corporation owns the freehold of the site. Brookfield acquired the London Wall Place site just 24 hours before Hammerson’s long-standing option expired, after the rival developer deemed it to be insufficiently profitable. Hammerson said at the time in a stock exchange filing: “The option has no value in Hammerson’s books and, in line with its revised strategy, Hammerson intends to allow it to lapse by 28 June 2012 as the scheme does not provide sufficiently high returns to the company.” The buildings are located on a site of significant historical importance in the City of London as the ground level offers public access to the mediaeval ruins of St Alphage Church. The project also involved restoring a section of the original Roman city wall. The Make-designed scheme, formerly known as the St Alphage site, was previously valued at £350m when Hammerson won planning approval to build it in 2011. The site incorporates the largest set of public gardens created in the City of London since the completion of the brutalist Barbican housing scheme in 1976. Tenants at London Wall Place include Schroders, which prelet the whole 310,000 sq ft 1 London Wall Place block in 2014. At 2 London Wall Place, tenants include US law firm Cleary Gottlieb, which occupies the top four floors, global investment manager IFM Global Funds, UK consultancy Barnett Waddingham and Italian investment bank Mittel. Around four floors are under offer at the second building, while 16,000 sq ft is still available to let. City outlook News of a potential £700m City of London sale comes amid cautious activity in the capital’s property market. Investment in the sector totalled nearly £2.8bn in the second quarter, taking the total for the six months to the end of June to £4.1bn. That represents a 43% drop against the first half of last year – and reflects a similar percentage drop on the five-year H1 average for overall spend, according to data from Radius Data Exchange. Deal activity picked up later this summer, with Mitsubishi selling 8 Finsbury Circus in July to a subsidiary of Singapore’s Stamford Land Corporation for £260m and Derwent London exchanging contracts in August on the £103m sale of the Buckley Building to a client of CBRE Global Investors. However, the mood in the City has darkened once again as Brexit uncertainty continues to limit stock availability. As one agent remarked: “There are no big deals under offer. The summer was strong but there is now a lack of product as there is not enough on the market. “Many people are refinancing; others are nervous they won’t achieve the right price. Most deals are being done under the radar, off market, as people don’t want to lose face if the buildings don’t sell. It is a more targeted approach.” Brookfield and the City of London Corporation declined to comment. Oxford Properties did not respond to requests for comment. To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette