Singapore’s City Developments Ltd is in exclusive negotiations to purchase the St Katharine Docks complex in London from Blackstone at a reported price of nearly £400 million ($495.7 million) as the American private equity titan says it is facing a fresh set of redemption requests from its property funds.
CDL said in an SGX filing on Monday that it has agreed to enter exclusive negotiations for the purchase of the 23-acre (9.3 hectare) campus beside the historic Tower of London while conducting due diligence on the transaction.
“The company is always examining opportunities to improve shareholder value and the SKD (St Katharine Docks) acquisition is one such opportunity,” CDL said in the statement issued following reports of the deal in the UK press. Blackstone is said to be disposing of the asset for just less than £400 million according to a market source not involved in the deal, confirming an account by CoStar.
The news of the potential sale of the London asset has surfaced after Blackstone, as first reported by the Financial Times, said late last week that it is facing $5 billion worth of redemption requests from its Blackstone Property Partners strategy after being forced to restrict withdrawals from its BREIT private REIT late last year.
Third Time’s the Charm
The St Katharine Docks complex spans more than 500,000 square feet (46,450 square metres) of waterside workspace, as well as 400 homes, alongside eateries, shops and recreational facilities at the eastern city fringe of central London.
CDL said negotiations are still ongoing and cautioned investors that there is no certainty that the acquisition will proceed. Company representatives also declined to confirm the reported purchase price.
Blackstone had acquired the campus in 2014 as part of its £448 million takeover of Max Property Group, a real estate firm headed by English investor Nick Leslau which had paid £156 million for the site in 2011.
Should a deal be concluded at the purchase price, that would be around 20 percent less than the £500 million which Blackstone was said to have asked for the property in a marketing exercise reported by real estate information provider React News in early 2020. In 2017, Sky News reported that the company had put St Katharine Docks on the market for £435 million.
Sitting on the banks of the Thames river east of the Tower Bridge, the docks first opened in the 1820s and now offer about 185 slips for yachts and megayachts, in a marina managed by Florida-based operator IGY Marinas. Among the complex’s major office tenants are WeWork and QA Ltd, a local tech training services provider.
Blackstone had not responded to Mingtiandi’s queries by the time of publication. Eastdil is understood to be one of the advisors involved in the transaction.
Blackstone, which has over $951 billion in assets under management, said in an earnings call on Thursday that it is facing $5 billion in redemption requests from Blackstone Property Partners, or roughly 7 percent of the $73 billion net asset value under the strategy.
The withdrawals from BPP were announced as Blackstone’s $69 billion BREIT, which targets wealthy individual investors, continues to face a backlog of pending withdrawals even after the company said in early December that it would enforce a policy limiting redemptions. That move came after BREIT withdrawals in October exceeded a monthly limit of 2 percent of its net asset value and passed a quarterly threshold of 5 percent.
Since that time Blackstone has moved to win over new investors to the private REIT including agreeing to a $4.5 billion capital injection from the University of California’s investment arm.
CDL Ramps up in UK
Chaired by hotel and property tycoon Kwek Leng Beng, CDL is looking to boost its UK portfolio further shortly after securing two student housing deals in Great Britain last year.
Last December, the SGX-listed firm announced that it had acquired five student accommodation properties with a total of 1,863 beds in Birmingham, Canterbury, Coventry, Leeds and Southampton for £215 million.
That purchase was announced six months after it entered the country’s purpose-built student housing segment with its £59.2 million purchase of a 505-bed property in the English city of Coventry from investment manager Erec Estates.
In December of last year CDL said that it was delaying a plan to list a REIT owning commercial assets in the UK after first announcing the scheme in mid-2021. In early 2022, CDL Hospitality Trusts, a REIT managed by CDL, indirectly acquired a hotel in Manchester, England for £24.1 million.
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