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By: Mark Wilding
Blackstone beats London & Stamford to buy west London business park for £480m
US private equity firm Blackstone is poised to buy Chiswick Park in west London for £480m in a deal that could also bring the first signs of life for the moribund UK debt market.
Blackstone entered into exclusive talks just before Christmas to buy the 1.9m sq ft business park, which is owned by the Chiswick Park Unit Trust and managed by Aberdeen Asset Management, Schroders and Stanhope.
Blackstone is believed to be negotiating with Deutsche Bank to fund the purchase through the previously lifeless CMBS (commercial mortgage-backed securities) market. The investment bank is gauging the appetite of European debt investors for bonds secured against rent from Chiswick Park.
The park was last valued at £350m in 2010, but lettings last year to Tullow Oil and QVC pushed the asking price up to £450m.
Selling agents CB Richard Ellis and Savills received bids from London & Stamford Property and Moorfield. Orchard Street Investment Management, backed by Singapore’s GIC, and British Land in a joint venture with Oxford Properties also expressed an interest in the park.
The sale process began after the life of the unit trust expired in December 2009, and a small but significant proportion of the unit holders decided to cash in their investments.
The sale price of £480m would represent a yield of around 7.5%, once vacant space is fully let and developments are completed.
The fund has a three-year debt package of around £200m from Eurohypo attached to it, which was refinanced last year.
Chiswick Park is seen as a good investment where the buyer will be able to drive up rents. There is also the potential to develop two remaining unlet plots.
It has proved particularly resilient in the downturn. Although other south-east business parks have struggled to attract tenants, Chiswick Park has achieved a string of big prelets, through Jones Lang LaSalle and Savills.
Orbis Technology took 35,000 sq ft in January 2010, followed by TV shopping channel QVC, which leased 143,000 sq ft in February. Tullow Oil agreed a lease on 134,000 sq ft in August.
Chiswick Park now has only 74,166 sq ft vacant, at quoting rents of around £32/sq ft.
The west London office market has benefited from occupiers moving away from the West End in search of cheaper rents. Strong take-up figures and a restricted pipeline has led developers such as Rockspring and BAM Properties to prepare schemes in Chiswick, Uxbridge and Weybridge.
Chiswick Park would be Blackstone’s second-largest UK purchase, after its 50% stake in the Broadgate office complex in the City of London for £1.1bn in 2009, including debt.
Dowley Turner Real Estate advised Blackstone.