Four months after taking one of the biggest reported post-Brexit hits, November’s sale of 10 Hammersmith Grove became a barometer for the UK property market’s surprisingly rapid recovery following a summer of uncertainty triggered by the referendum result.
The 8-story prime office building in west London began last year under the ownership of UK real estate firm Aberdeen Asset Management – its 2013 construction had been forward-funded for £50 million ($61 million; €57 million) by Scottish Widows Investment Partnership Property Trust, a pension fund now part of Aberdeen’s stable.
But by the end of last year, 10 Hammersmith Grove had been the subject of several rejected bids before eventually being sold to opportunistic UK fund manager Brockton Capital in the chaotic aftermath of the vote, and then flipped for a sizeable gain to Hong Kong-based listed investment company Tai United Holdings – not a bad 12 months for a former unused multi-story car park.
Regarded as one of London’s most technologically-advanced office buildings when it was constructed, its design also incorporated a number of environmentally-friendly techniques including roof-mounted solar panels, LED lights and cutting-edge cooling and heating technology. These factors won the building the British Council for Offices Commercial Workplace award, an honor also bestowed on London’s Leadenhall Building, colloquially known as the Cheesegrater, and One Eagle Place, in Piccadilly Circus, which is part of the Queen’s Crown Estate.
Weeks after the Brexit decision, Aberdeen was forced to offload several assets in order to release liquidity following a run on two of its UK open-ended real estate funds, with the most widely-publicized of these being 10 Hammersmith Grove. Despite numerous higher bids, it was Brockton’s £85 million offer, for an asset marketed at £105 million, which won. The reason, according to Brockton co-founder David Marks, was his firm’s rapid diligence and efficiency which saw the deal closed, from receipt of papers to completion, in just 65 hours.
By the end of summer, a sense of investor confidence had returned and the open-ended funds lifted their gates. At this point, according to an industry source, the offers for 10 Hammersmith Grove began to roll in and by November the firm had sold its Brexit bargain to Tai United for £103.5 million – a tidy £18.5 million, or 22 percent, pricing gain. The pricing also demonstrated how the London office market had recovered after such a panicked beginning to the summer.
Brockton’s ability to sell the building was certainly enhanced by October’s news that Heathrow Airport is to receive a new runway as part of an £18 billion facelift. Offices in west London and the West End are predicted to reap the largest rewards from the airport’s expansion.
Other attractive factors for institutional investors include the asset’s proximity to the Westfield Shopping Centre and Heathrow, both within 20 minutes’ drive, as well as excellent transport links into the West End and the City.
Stressed out executives working in the building also won’t have to travel far for a smoke because one of the building’s major tenants is international tobacco manufacturer Philip Morris, which has leased the top three floors. Other tenants include Fox International Channels UK, UKTV, the multi-channel broadcaster, and Accor, the hotel group.
Speaking after securing 10 Hammersmith Grove, Meng Zhaoyi, chairman and chief executive of Tai United Holdings, said London was “impregnably” positioned as a leading global financial center. Given the projected increases in London office space over the next few years, following last summer’s dip and incorporating Heathrow’s proposed expansion, it is entirely plausible that 10 Hammersmith Grove may find itself with another set of owners in the coming years.
After a tumultuous year, if this particular building could actually talk, it might well be lost for words, or worse, it might need counselling.