The real estate development and investment management business of Canadian pension fund Ontario Employees Retirement System is poised to acquire one of the largest office parks in Europe.
According to multiple reports in the UK press, Oxford Properties is the preferred bidder for the 180-acre Green Park office park near Reading, beating rival bids from a host of private equity real estate firms including The Blackstone Group, Morgan Stanley Real Estate Investing, Orion Capital Managers and Moorfield.
Oxford’s bid of £415 million (€472 million; $679 million), though not thought to be the highest for the park, was made all-cash. The park is being sold by Prupim, the real estate fund management business of Prudential.
Green Park is one of the largest office parks in Europe. It is let to companies including Cisco Systems, Symantec Software and Logica across its 1.3 million square feet of office space, but has significant voids also.
According to one PERE source, the vast wall of capital chasing few available prime office buildings in London is forcing investors to consider alternative homes for their capital and UK business parks is one area now under greater scrutiny. He said: “As you start to get a shortage of product, and there is never a huge supply of prime property, this is what happens. Reading would have been a ‘no-go’ area 18 months ago.”
In January, Blackstone bought another of the UK’s largest office parks, Chiswick Park immediately west of London, for £480 million. The deal was the New York private equity and real estate giant’s first UK investment for about 15 months following its September 2009 investment in Broadgate, a giant office complex in Central London. Chiswick Park, sold by a group of investors led by Schroder Property, Aberdeen Property Investors and Stanhope, was also hotly contested for by private equity real estate firms, including Moorfield and opportunity fund turned REIT London & Stamford.
OMERS has recently been making positive noises about its real estate exposure. In March, the Canadian pension fund said its real estate holdings, via Oxford Properties, had returned 0.86 percent more in 2010 than in 2009, helping to boost its overall return to 12 percent for the year. Oxford Properties was formed in 1960 and currently manages approximately $16 billion of assets.