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Brookfield has put London’s Citypoint tower up for sale, in the biggest test yet of the UK capital’s office market after a brutal two-year downturn.
The Canadian asset manager is seeking £500mn from a sale according to people familiar with the matter. The process comes as Brookfield faces a deadline on about £460mn of debt secured on the 36-storey building.
The debt is due in January, after Brookfield extended the loans for 12 months last winter. Brookfield has appointed advisers and sounded out potential buyers, according to people familiar with the matter.
Brookfield has not formally attached a price tag but is targeting at least £500mn, which could mean a price as much as 25 per cent lower than a March 2023 valuation of £670mn included in loan documents. Brookfield could explore financing options if the sales process fails.
The tower is by far the largest office building to be brought to the market in London this year as the commercial property market starts to recover from a two-year downturn. Green Street News first reported the sale.
Only a handful of office buildings across London have sold for more than £100mn in London this year, making Brookfield’s sale effort a huge test of investors’ appetite for these properties and what price they will demand.
The roughly £500mn that Brookfield is seeking is below the £607mn it paid to acquire the building in 2016. The firm has since invested £40mn in upgrades, boosting occupancy to 82 per cent.
Tenants include law firms Simpson Thacher & Bartlett and Simmons & Simmons. The tower, built in the 1960s initially for British Petroleum, also includes retail, leisure and storage units.
A person close to the process said Brookfield had decided to sell because the asset sits in one of its older funds, which has performed well overall and is now selling its final investments.
The fund, Brookfield Strategic Real Estate Partners I, dates from 2012 and has returned 18 per cent net IRR. It had just $533mn worth of unrealised investments as of June, according to company filings.
One of the world’s largest owners of offices, Brookfield has taken some hits from the downturn in this market as investors have grown concerned about the impact of hybrid working post-pandemic. The firm has reportedly chosen to default on some huge assets in the US rather than inject fresh capital.
In London, it co-owns Canary Wharf Group with the Qatar Investment Authority. The two investors injected £300mn of fresh equity into the docklands landlord last year, which has helped Canary Wharf Group to navigate a series of debt maturities.
Real estate investment bank Eastdil and Newmark BH2 are advising Brookfield on the Citypoint sale.
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