The Blackstone Group has put forward an offer to buy the assets of a UK listed property company at a level valuing the group at £447.7 million (€566 million; $764 million).
London Stock Exchange-quoted Max Property Group revealed today that the New York firm had submitted the offer on behalf of its record-breaking Blackstone Real Estate Partners Europe IV fund that closed on €5.1 billion in March this year.
The portfolio includes a variety of asset classes such as central London offices in the shape of St Katharine Docks, regional offices, London pubs, and warehouse assets dubbed the Industrious portfolio.
In an announcement to the stock exchange, Max Property said the proposed disposal reflected a 22 percent increase over net asset value reported in its March 2014 annual report. The offer also coincides with the company's investment period ending in May.
Ken Caplan, head of European Real Estate at Blackstone, said: “We are excited to be entering into this transaction with Max as it reflects our continued confidence in the strengthening UK markets. These properties are great additions to our London office portfolio as well as our growing UK industrial and logistics platform.”
Blackstone is proposing to acquire the assets of a company established in 2009 “at a time of turbulence and distress in property, finance and investment markets”. Max Property added: “At the time of listing, the board anticipated that delivery of the group's strategy would take some seven and a half years, allowing time to build a portfolio, work the assets acquired to enhance value and ultimately for shareholders to benefit from an anticipated upwards trajectory in property values following the expected recovery after the market crash of 2008.”
It continued: “It is also the board's view that the prospects of achieving higher prices for the group's investments over its remaining life, whether as a result of the market potentially continuing its rapid rise and/or through the results of further intensive asset management, are outweighed by the downside risks for shareholders from the execution risk and market risk arising from a phased disposal programme over approximately the next two years. In the opinion of the board, the potential increase in returns that might be achieved through a phased disposal programme provides inadequate compensation for the risks in doing so. With this in mind, the board believes that Blackstone is one of only a few substantial property investors with access to very significant financial resources and the management capability to immediately absorb some complex multiple asset management situations in a large and diverse group of assets.”
Completion of the sale is slated to take place on August 18, following an extraordinary general meeting on August 11. Should the deal complete, those receiving returns would include Och-Ziff, an original cornerstone investor in the company. It will receive 17.2 percent of the total surplus over net funds invested.