Brookfield splashes $812 million on London offices
LONDON (Reuters) - U.S. group Brookfield Office Properties BPO.N has spent 518 million pounds ($812 million) buying London office assets from Hammerson (HMSO.L), in a deal that will see the British developer meet its aim of focusing on retail property.
Brookfield, which owns 78 million square feet of offices in North America and Australia, said on Tuesday the six sites it was buying included skyscraper 99 Bishopsgate and a development plot, Principal Place, in the City of London financial district.
"We accept that it is a difficult period at the moment but long term we have every faith in the London marketplace," said Martin Jepson, senior vice president for investment, who joined Brookfield from Hammerson last August.
"New starts and development have just stopped, so there is no threat of major oversupply coming forward unless there is a major dumping of secondhand stock on the market place ... In the medium to long term there are prospects for growth in the City of London" he told Reuters.
Office developers have struggled to find tenants in central London over the past year amid concerns about economic weakness.
Law firm CMS Cameron McKenna pulled out of talks to pre-let a third of Principal Place in January while other skyscraper schemes have been put on hold after fruitless searches.
Jepson said Brookfield would start construction on the 485 million pound Principal Place scheme once it found a pre-let and was eyeing tenants from the financial services, media and professional services sectors.
Brookfield, which already owns part of the 100 Bishopsgate skyscraper scheme in the City, was still looking for more sites as it wanted a London office portfolio complementary to those it has in other major financial centers, Jepson said.
The deal also sees Hammerson reaching its goal of becoming a specialist retail property company. It said its remaining portfolio would be 97 percent retail and it would look to reinvest the proceeds in shopping centers, retail parks and designer outlets.
Hammerson said it expected to receive a payment of 329 million pounds for 99 Bishopsgate, Principal Place and two smaller properties by September 30. The sale of the other buildings, 125 Old Broad Street and Leadenhall Court, will complete by June 2013 for 189 million pounds.
The company, which owns and holds stakes in some of Britain's largest malls, such as the Bullring in Birmingham and Brent Cross in North London, first put its office portfolio up for sale in February.
Hammerson (HMSO.L) were up 2.4 percent at 427.6 pence at 0905 GMT.
($1 = 0.6382 pound)
(Editing by Dan Lalor)