Oxford strikes £320m JV with Crown Estate

The real estate arm of the Ontario Municipal Employees Retirement System has invested again in central London, this time forming a 50:50 venture with the Crown Estate to develop a mixed office and retail property off Regent Street.

Oxford Properties has purchased a 50 percent stake in St James’s Market, a mixed office and retail development between London’s Regent Street and Haymarket valued at £320 million (€378 million; $484 million).

The real estate arm of the Ontario Municipal Employees Retirement System (OMERS) acquired the half-share from the property company of the British royal family and one of central London’s biggest landlords, The Crown Estate. The deal sees the Canadian firm inherit a 150-year leasehold interest in the two-block scheme. The Crown Estate will retain the freehold and lead its development.

When it is completed, St James’s Market will comprise 210,000 square feet of office space and 50,000 square feet of retail and leisure space. Paul Brundage, executive vice president and senior managing director at Oxford Properties, said: “St James's Market represents a truly exciting opportunity for us to partner with one of London's foremost property companies on a landmark project that will transform a historic corner of London.”

Oxford has been one of the more acquisitive international institutions hunting core real estate in the UK of late. Last November, it purchased St Martin’s Court, an office in the City of London, from Legal & General Property for £110 million. The firm has invested more than $11 billion of equity in real estate and currently manages a platform of more than $20 billion, although it is looking to grow by another third to $30 billion by the end of 2015.

For The Crown Estate’s part, the sale to Oxford marks the third collaboration with a large, international institutional investor in recent years. It follows the formation of a joint venture with Norges Bank Investment Management, which saw the Norwegian state fund buy a 25 percent stake in Regent Street, and a 50:50 venture with another Canadian investor, Healthcare of Ontario Pension Plan, for another asset called the Gateway development.

In a statement on the sale, The Crown Estate said: “The deal with Oxford Properties builds on our strategy to provide working capital for investment in our core holdings, where we retain critical mass and benefits from specialist expertise, including London's West End, dominant regional retail schemes, offshore renewable energy and strategic rural land.”