The second time around

Two losing bidders for the £1.3 billion Abbey portfolio have received a second chance to get in on the action.

Normally there is no silver medal in a real estate deal. One bid is victorious, the rest go away empty handed. Just occasionally, though, the runners up also get a piece of the action.

ING Real Estate Investment Management, the manager that teamed up with JP Morganto win the battle for the largest real estate portfolio ever sold in the UK, the £1.3 billion ($2.3 billion; €1.9 billion) real estate portfolio of UK bank Abbey, has sold £200 million of the property it acquired to two groups that were involved in competing bids, only a month after their acquisition.

Norwich Property Trust, a retail fund managed by Morley Fund Management that put in a joint bid for the portfolio with Anglo Irish Bank, is buying five office properties in provincial British cities in a deal worth £110 million. Prudential Property Investment Managers (PruPIM), the UK real estate investment arm of US insurer Prudential that had the backing of the Royal Bank of Scotland for its original bid, is paying £90 million to acquire eight retail properties, four industrial properties and one office building in sites around the UK.

The widely contested sale process attracted a range of potential suitors including Morgan Stanley, GE Capital, Apollo Real Estate, and several private investors.

A spokesman for Morley said that the firm had been interested in the deal because it represented a rare opportunity to acquire a diverse portfolio, both geographically and across different property sectors. “The office buildings are located in prime positions within dominant provincial centers and will offer opportunities for asset management and attractive rental growth going forward,” he said.

Abbey, the UK building society that was bought up last year by Spain's biggest bank Santander Central Hispano, announced its plans to sell off the 128 properties last April. The portfolio, which was previously owned by Scottish Mutual and Scottish Provident, contained over six million square feet of leasable space in a range of commercial sectors, and included several landmark buildings in Scotland.

The widely contested sale process attracted a range of potential suitors including Morgan Stanley, GE Capital, ApolloReal Estate, and several private investors. However, it was ING, backed by JP Morgan, which lodged the successful bid. Following the completion of the deal, the firm was reportedly planning to divide the portfolio between its various account clients and funds; its open-ended British flagship fund ING Lionbrook, for example, is purchasing a £255 million share.

Other investors who lost out on the Abbey deal need not get excited however. ING has said that they are unlikely to sell any more of the portfolio to other funds for the immediate future.


UBS eyeing Centre Point UBS Global Asset Management, an arm of the Swiss bank UBS, is leading the race to buy London landmark office tower Centre Point, according to press reports. The firm is expected to pay £84 million (€124 million; $152 million) for the building, which is being sold by The Blackmoor Limited Partnership, a consortium including Apollo Real Estate Advisors, Europa Capital and Deutsche Bank. Blackmoor acquired the 35-story tower as part of the Oldham Estate Company in June 2000, and has since renovated the building and added a public bar on the ground floor.

Apollo, DB leave Wandsworth
Wandsworth LP, a joint venture between Apollo Real Estate Advisors, Deutsche Bank Real Estate's Global Opportunities Fund and developer Portfolio Holdings, has sold the Southside shopping complex in the southwest London district of Wandsworth. The buyer was the Metro Shopping Fund, a London retail joint venture between UK property companies Land Securities Group and Delancey. The £188 million (€278 million; $340 million) purchase price represents a yield of 5.75 percent. Wandsworth acquired the complex, then called the Wandsworth Arndale Centre, for £40 million in 2000. They have since spent £70 million rebranding and refurbishing it, adding a new 14-screen cinema, a gym, and a restaurant level.

First exit from Canary Wharf
Saudi Prince Alwaleed Bin Talal has reduced his stake in Songbird Estates, the vehicle created for the MSREF-led acquisition of Canary Wharf Group in 2004. He reduced his stake from 18 percent to 7 percent of total share capital by selling 28.2 million B-shares in the London-listed company. Although the value of the transaction was not disclosed, these shares were worth £39 million (€58 million; $71 million) at trading prices at the time of the sale. The identity of the purchaser is unknown. However, reports have noted that investment bank UBS has been building up its stake in the company over the summer. This is the first major change to the ownership of Songbird since June last year when its B shares began trading on AIM. The company owns 61 percent of the entity that controls London's second business district, Canary Wharf. The remainder is owned by a consortium that opposed Songbird's bid.

Rotch sells out
Rotch Property Group, the real estate management company managed by British-Iranian entrepreneurs the Tchenguiz brothers, has sold a portfolio of industrial and office properties to the UK's Sackville Properties in a deal worth £100 million (€148 million; $181 million). The portfolio consists of 31 office and industrial properties, including three cashhandling depots let to Securicor and five nursing homes. The group is also reported to be close to selling the Woolgate Exchange office complex in the City of London to IVG Asticus, the London arm of German real estate company IVG. Both deals are part of a program of disposals of some of Rotch's older properties.

JER buys in Germany, sells in Sweden
JER Partners, the private equity arm of US investment company JE Robert Companies, has teamed up with local investor HP Stoessel Unternehmensbeteiligungen (HPS) to acquire a portfolio of 11 properties in Berlin in a deal worth €51 million ($63 million). The properties, which are mainly residential, are JER's second deal in Germany, following a December 2004 transaction in which it provided mezzanine financing for the acquisition of six Munich office buildings. In a separate deal, JER has also sold 32 retail properties in Sweden to Swedish property company Kungsleden for €80 million. JER Partners has launched five private equity real estate investment funds since 1997 with over $2 billion of capital committed.


Morley double office buy
Morley Fund Management has acquired two UK office buildings from private vendors in deals worth a combined £16.4 million (€24.2 million; $29.7 million). The firm paid £8.2 million for Quay House, a five story detached office in Merry Hill, Birmingham, occupied by the British Standards Institution and UK bank Lloyds TSB. It has a rent roll of £627,050 per annum. Further south, in Exeter, Devon, the firm has acquired two five-story terraced buildings for £8.3 million. They each include a basement car park and are leased to the Bank of Scotland and the South West of England Regional Development Agency respectively. The Birmingham office of brokerage Colliers CRE represented the purchasers.

IXIS in German warehouse acquisition
IXIS Capital Partners, the London-based property subsidiary of France's IXIS Corporate & Investment Bank, has bought three logistics centers in Germany in a sale and leaseback from German department store and mail order group KarstadtQuelle AG. The price of the three distribution warehouses, which are located in Unna, Essen, and Brieselang, was not disclosed. KarstadtQuelle's other recent disposals have included the sale of 74 department stores and specialty chains Sinn-Leffers, Wehmeyer, Golf House, and Runners Point. IXIS participated in the takeover of Sinn-Leffers, alongside German industrial holding Deutsche Industrie-Holding and US HMD Partners. The company retains logistics centers in Frankfurt and Leipzig.

Catalyst and Merrill team up on secondary buyout
Catalyst Capital, the pan-European commercial real estate and asset management group, has formed a joint venture with the global principal investment group of Merrill Lynch to acquire a portfolio of 18 offices leased to France Telecom in a deal worth more than €120 million ($147 million). The vendor was CGW Consortium, a group comprised of GE Capital, Goldman Sachs and French credit institution CDS Ixis, which bought the offices as part of a 457-property portfolio acquired in a sale and leaseback from the French telecom company in 2002. The properties are located in 14 French cities including Paris, Lyon, Toulouse, and Marseille. Merrill Lynch's real estate finance division provided debt for the deal.

Macquarie teams with Akeler in UK offices
A joint venture owned by Australia's Macquarie Bank and private real estate investment and development company Akeler has paid £130 million (€313 million; $235 million) to purchase two business parks in the UK. The venture, which is 85 percent owned by Macquarie and 15 percent owned by Akeler, has acquired Reading International Business Park to the west of London, and Central Quay, in Glasgow, Scotland. The two developments, both of which are under five years old, will be managed by a separate 50:50 joint venture between the two firms. Since 2002 Akeler has been owned by Lend Lease Global Properties, an arms-length fund managed by Macquarie Global Property Advisors, the private equity real estate subsidiary of the Australian bank.

Blackstone sells German office complex
The Blackstone Group has sold an office complex in Düsseldorf's banking district to New York-based property owner and developer Tishman Speyer. Terms of the transaction were not disclosed. The seven office buildings encompass 41,600 square meters and are the regional headquarters for German financial institution Deutsche Bank. The acquisition represents Tishman's ninth major investment in Germany since 1988, involving properties with a value of approximately €2.2 billon ($2.7 billion).