London Office Bldg Leased By WeWork

London Office Bldg Leased By WeWork Up For Grabs For £935mil

UNITED KINGDOM – An office building in London where coworking space provider WeWork is a tenant has entered the market for £935 million, reported The Financial Times on Wednesday evening (9 February, SGT).

The commercial property, known as One and Two Southbank Place, which also houses the HQ of Shell, is being marketed by property developer Almacantar. The aforementioned asking price, which is among the highest in the city since the start of the COVID-19 pandemic, translates to a yield of about 4 percent.

The marketing of the office development is viewed as the largest test of investors’ confidence in WeWork since its initial public offering IPO in 2021 following a failed listing in 2019.

Post IPO and under new management and with more conservative growth targets, a lease by WeWork is now regarded as stronger, said property agents and investors.

Almacantar’s Founder and CEO Mike Hussey said the successful listing on the New York Stock Exchange last year had “given people more confidence” regarding the coworking space operator.

“People feel WeWork has significantly improved as an investment prospect [since 2020],” said Nick Braybrook, Head of capital markets in London at property consultancy Knight Frank. However, he underscored that “much depends on investors’ view on WeWork”.

Earlier this month Singaporean’s Sun Venture invested £148 million to purchase 120 Moorgate. The office building is currently leased by WeWork and it was divested by the coworking space provider’s real estate acquisition and management division. The commercial property’s net initial yield works out to about 4.5 percent.

Notably, Southbank Place had been on the market two times before in the last 3 years, but at both times, the would-be deal was scrapped. During the collapse of WeWork’s IPO in 2019, the £850 million sale of the office complex to Singapore group Bright Ruby was cancelled.

Meanwhile, London’s office market is benefitting from the return of foreign property investors after international travel curbs were withdrawn, with a several major transactions in the works

Hong Kong’s CK Asset Holdings is on the verge of concluding the divestment of 5 Broadgate, an office building that serves as the UK headquarters of Swiss bank UBS, to LaSalle Investment Management and South Korean pension fund NPS for roughly £1.2 billion, said two people with knowledge of the matter.

Also, Deutsche Bank’s new HQ 21 Moorfields is also nearing a sale, with owner Landsec asking for slightly more than £1 billion, said the sources.
“It’s very rare to have a sale at £900 million to £1 billion; it just happens there are three out there at the moment,” added one of them.

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