By Tom Bill
LONDON Jan 29 U.S. private equity group
Blackstone may sell its half stake in a London office and
retail complex, its partner British Land said, a deal
that could bring Blackstone a sevenfold return on its original
Blackstone bought its share of the 30-acre Broadgate site in
London's financial district from property firm British Land in
September 2009 for 77 million pounds ($120.9 million), a stake
now valued at 520.5 million pounds after debt, according to
British Land's 2012 annual report.
Reuters reported in September 2011 that Blackstone was
considering a sale of its stake in Broadgate, which would be one
of London's largest property transactions in recent years.
The process appears to have taken a step forward since a
lock-up agreement expired late last year, allowing a sale to go
British Land publicly acknowledged that Blackstone could
sell out of Broadgate on Tuesday, saying: "We intend to retain
our 50 percent stake and work closely with Blackstone through
any sale process".
British Land Chief Executive Chris Grigg said the original
sale to Blackstone had enabled his company to rebalance its
London portfolio between the City and the West End districts and
press ahead with developments that will bring in large profits.
"One can always look back and say 'if I knew then what I
know now', but we sold at the time to give us financial
flexibility," Grigg told Reuters after a trading update on
Blackstone was not immediately available for comment.
"It was always strategically the right thing for British
Land to cut its exposure to the City but I have always
questioned the timing," said Investec analyst Alan Carter.
The Broadgate development, which is adjacent to Liverpool
Street train station, was built between 1984 and 2008 and could
attract interest from Oxford Properties, the property arm of
Canada's Ontario Municipal Employees Retirement System and
Norway's sovereign wealth fund, property experts said.
Broadgate tenants include Swiss bank UBS, which is
planning a 340 million pound London headquarters in Broadgate
despite concerns it will struggle to fill the 700,000 building,
which will include several trading floors, after deep job cuts.
"Predicting headcount in banking is something you can spend
a lot of time fretting over," said British Land's Grigg. "From
our point of view they have leased the whole building and my
view is that it fits with their overall requirements."
British Land said a recent run of retailer failures across
its portfolio including HMV and Jessops had pushed the number of
units in administration to 1.2 percent from 0.8 percent at the
end of 2012.
"There were a number of failures but they were principally
failures we expected," said Grigg. "We have a great record of