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Madison in £200m London City swoop

The direct secondaries specialist has purchased a 50% share in a collection of office buildings in London’s Paternoster Square from Oxford Properties, the real estate business of Canadian pension Ontario Municipal Employees Retirement System.

Madison International Realty, the private equity real estate firm specializing in direct secondaries transactions, has completed a significant investment in an office scheme in the City of London.

The firm has acquired for approximately £200 million ($250 million; €239 million) a 50 percent stake in Paternoster Square office assets from Oxford Properties Group, the real estate business of the Ontario Municipal Employees Retirement System.

Among the assets are Kind Edward Court, which accommodates the London Stock Exchange, and St Martin’s Court, CBRE’s headquarters in the City.

The acquisition typifies the sort of deal Madison undertakes via its direct secondaries strategy, which entails buying positions in direct ownership structures such as joint ventures or club arrangements, versus traditional secondaries, the buying of units or interests in funds.

The firm has received considerable investor support for this strategy. In July, it held a $1.4 billion final close for its Madison International Real Estate Liquidity Fund VI, its largest fundraising to date. That final closing far exceeded the firm’s $950 million target for the vehicle.

Investments in the fund include a $150 million interest in Hudson’s Bay Company Property Vehicle, a $66 million stake in St Stephen’s Green Shopping Centre, Dublin, and the acquisition of a $103.7 million ownership stake in 550 Kearny Street, an office building in San Francisco.

Ronald Dickerman, president and founder of Madison, said his firm’s investment in City offices demonstrated his firm’s continued appetite for London investments following Britain’s vote to leave the European Union in the summer. He said: “We have purchased over £300 million worth of real estate in London since the EU referendum and have every confidence in both the City’s continued position as a leading global financial center and its enduring appeal as a destination for international business.”

For OMERS, the sale of the stake came four years after it purchased St Martin’s Court and three since it bought King Edward Court. While it is relinquishing half-shares in the assets, it will retain asset management responsibilities for them.

Paul Brundage, the firm’s executive vice president and senior managing director Europe, said he expected the deal to signal the start of an investment program which should extend to other international markets. He said: “We are delighted to establish a new joint venture with Madison International Realty, a partnership we hope to develop further across Europe and North America.

“This transaction is in line with Oxford’s strategy to co-invest with strategic partners and lever our European platform to deliver enhanced returns.”