The largest single asset property deal since the start of the global financial crisis is in the offing after it emerged that sovereign wealth funds have bid to acquire Chiswick Park, a large office park in West London.
The Financial Times reported the park could be sold for approximately £800 million (€986.3 million; $1.29 billion) after bids were submitted by China Investment Corporation, National Pension Service of Korea and an unidentified Malaysian state fund. A sale at that price would likely coup a significant profit for seller, New York-based The Blackstone Group.
The 1.8 million square foot complex was purchased by Blackstone for £480 million in early 2011, a deal that marked the firm’s return to UK property investing after an approximately 15 months hiatus. Since then, Blackstone has improved the park’s vacancy level to 1 percent from 9 percent and its estimated rental value from £30 a square foot to £46 a square foot, according to a report by UK commercial property magazine, Property Week.
The park is rented to tenants including Paramount Pictures, CBS News, Regus, QVC, Singapore Airlines, Tullow Oil, Swarovski and Technicolour.
The park has provided another milestone since the start of the crisis. In June 2011, it was subject to the first successfully placed CMBS since the crisis put that part of the debt market on its knees. Investment bank Deutsche Bank completed the securitisation backed by a £302 million loan to Blackstone as it purchased the park from a consortium of sellers comprising fund managers Aberdeen Asset Management, Schroder Property and private property company Stanhope.
At the time, Charles Roberts, a partners at law firm Paul Hastings, which advised Deutsche Bank, said the financing was a landmark transaction for the European CMBS market and could precipitate its recovery. He said: “The success of this transaction indicates that the CMBS market has the ability to re-emerge as a significant source of debt capital for the European commercial real estate market.”
Blackstone’s original purchase was also funded in part by a $60 million mezzanine loan from Government of Singapore Investment Corporation, another Asian sovereign wealth fund.