LONDON-Brookfield Office Properties Inc., based in New York City, has agreed to buy the Hammerson office portfolio for $829 million. Locally based Hammerson, a developer REIT, said in February that it wanted to sell the portfolio to concentrate solely on retail property.
The portfolio includes four office properties totaling 884,000 square feet and a development site that has planning approval for an office and residential tower comprising 857,000 square feet. Dennis Friedrich, president and global CIO for Brookfield, said in a statement that this presents the company with a chance to acquire top-quality assets in the London market. “This acquisition aligns with our strategy of providing front-office accommodations to the world’s most prestigious tenants by owning and operating premier properties that are well-located within the most dynamic global markets,” he said.
Brookfield is funding the acquisition through the assumption of $106 million of debt, additional property level debt expected to be put in place prior to close, and from available cash. The deals are closing in June and September for the various properties.
The deal includes 125 Old Broad St., 99 Bishopsgate, Leadenhall Court, as well as a collection of sites at One Puddle Dock and Shoreditch High Street. The deal also includes the Principal Place development parcel, which has planning approvals for a 51-story tower.
Hammerson had just acquired a stake in the 26-story Bishopsgate building last summer for $150 million. The building is 62% occupied, and Brookfield will own the tower in a 50-50 joint venture with Great Portland Estates.
The Old Broad Street property, 98% leased, is also a 26-story office that Brookfield will own in a 50-50 JV with two existing, unnamed partners. Leadenhall Court is a 109,000-square-foot office at the corner of Gracechurch and Leadenhall streets, fully leased until March 2014 to a single tenant.
According to a year-end report, Hammerson believes the current economic uncertainty has created a slowdown in demand for office space. The company still holds its interest in its headquarters at 10 Grosvernor St.
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