MGPA makes second UK acquisition for Fund III

MPGA, the European and Asia focussed private equity real estate firm, has bought its second UK asset for its latest property fund, MGPA Europe III.

The firm said today it is buying Exchange Tower, Harbour Exchange, in London's Docklands area for £134 million (€161 million; $197 million) from UK Reit, Hammerson with completion of the deal set for September. It follows MGPA’s maiden UK acquisition in December of Lands Improvement Holdings, the once-listed land development company.

MGPA Europe Fund III is part of the larger MGPA Global Fund III, which closed in June 2008 with commitments of $5.2 billion to invest across Europe and Asia. Europe Fund III raised $1.3 billion (€841.5 million) and has already made investments in France, Italy, Greece and Poland, as well as the UK.

Harbour Exchange is a nine acre freehold estate built in 1989 incorporating a 482,950 square foot office tower known as Exchange Tower as well as 565 car spaces and the superior leasehold interest of the adjacent Harbour Island block.

Seller Hammerson acquired the property in 1999 for £77 million.

MGPA’s head of UK acquisitions, Hamish MacDonald, said in a statement that the firm was “positive” about rental growth prospects for the Central London office market due to the lack of supply available from the previous cycle and the constrained immediate development pipeline. “In Exchange Tower,” he added, “the fund has acquired a good quality, multi-let office building at a capital value below reinstatement cost and in a highly supply-constrained sub-market.”

David Atkins, chief executive of Hammerson, said Harbour Exchange had been a good investment for the company over the last decade, however it believed that capital could be better deployed on other opportunities.