Blackstone is seeking offers from sovereign wealth funds on Chiswick Park for as much as £800m, which would reflect a more that 65% premium to its purchase price just over 18 months ago.
A sale of the 1.9m sq ft park at £800m would likely crystalise one of the strongest returns in European real estate in such a short period in the five and a half years since the credit crunch, writes Paul Norman and James Wallace.
Blackstone’s profit, however, would be less the considerable capital expenditure the private equity giant has invested in the office campus.
A sale, likely to take until the first quarter of next year at the earliest, could see the subsequent early repayment of the outstanding Chiswick Park CMBS balance, which Deutsche Bank closed in June 2011, if the buyer prefers an unleveraged hold.
GIC, Singapore’s sovereign wealth fund, could also potentially see its £60m mezzanine loan repaid.
CBRE is understood to be be advising Blackstone, which bought the park from the Chiswick Park Unit Trust in March 2011 for £480m with 100,000 sq ft still available in Building 4 and Building 11. At the time rents were being achieved in the early £30s per sq ft.
In May of this year Blackstone leased in its entirety the 220,000 sq ft Building 6 to oil services group Aker at a recession-busting average rent of £46 per sq ft.
The deal came after International SOS signed for 43,000 sq ft at the park last year at a rent of £38.50 per sq ft, while lettings to Swarovski and Absolut Vodka are understood to have been at around £42 per sq ft.
A source close to the process said: “It was the deal of the year when Blackstone bought it in 2011 and it will be the deal of the year if they sell at £800m, whether by the end of this year or next.”
Blackstone and its developer partner Stanhope have been pressing on with speculative development of the only other undeveloped plot at the park, the 315,000 sq ft Building 7. It is unclear whether this will continue during the sales process.
CBRE and Savills act for Blackstone and Stanhope on lettings.
A number of trophy assets have come to market in the West London office market in recent weeks underlining current market confidence about Chiswick and nearby Hammersmith’s popularity with occupiers and investors.
In September BAM appointed Cushman & Wakefield to seek offers of £48.067m for the 64% let 80,000 sq ft Chiswick Green, a yield of 6.25%.
Last week, GE instructed Jones Lang LaSalle to sell The Ark, its iconic headquarters building in Hammersmith, for £78.7m, a 6.5% yield.
The Chiswick Park CMBS, DECO CMBS-CSPK, was hoped to spark the revival of capital markets, before the eurozone debt crisis prompted rated bond buyers to retrench their appetite.
Blackstone declined to comment.