Starwood Capital Group, the Greenwich, Connecticut-based private investment firm, is reportedly in negotiations to sell its minority stake in a proposed City of London office tower over fears that the UK’s decision to leave the European Union will hurt demand for office space.
As a result, PERE understands, Starwood is planning to dispose of its £60 million ($75 million) stake in One Braham, an 18-storey office building, which will be constructed on a site just 300 meters from the ‘Gherkin’ tower, near London’s financial district. The development, once completed, will have space for about 3,650 workers.
The buyer is reportedly Aldgate Developments, Starwood’s joint venture partner, which is understood to be in the process of finding a replacement partner before commencing the construction process.
Following last summer’s referendum result, many City institutions forecast a recession in the London office market either this year or next. But by the end of August, New York-based research firm MSCI had officially announced that the London office market was formally in recession, following the release of its UK Monthly Property Index at the end of August.
However, by October, City of London economists began revising their expectations of a recession on the back of surprisingly positive data, including a stimulus package from the Bank of England and the Government.
Spokesmen for Starwood and Aldgate Developments declined to comment.
Despite Starwood reportedly out of a London office deal, the firm has still backed the UK student accommodation market after it bought a portfolio of assets across the country for around £120 million in December.