A glut of investment deals has been put on ice this week as investors take stock following last week’s shock EU referendum vote.
A number of big-ticket investment deals that were well under way pre-vote are now under a cloud of uncertainty, with buyers expected to at least seek a renegotiation on price.
One of the biggest deals now under review is Oxford Properties’ £200m bid to buy Mulberry’s flagship store on New Bond Street in London’s West End from Aberdeen Asset Management. The Canadian firm, in a joint venture partnership with New York retail investor Crown Acquisitions and Swiss luxury retailer Richemont, was under offer to buy the store at 50 New Bond Street, as well as 45-46 New Bond Street.
Other deals that were quietly progressing on an off-market basis may fall through completely. German fund Union had been under offer to buy Hines’ Cannon Place in the City of London for around £465m, at a yield of 4.75%, but is understood to have pulled the plug. Another German fund, KanAm, is thought to have withdrawn from the £190m acquisition of 1 Wood Street, also in the City, from Aerium and Korean life insurance company Hanwha Life.
Meanwhile, the private Spanish buyer under offer to buy 1 Chancery Lane in London’s Midtown has pulled out of that £20m acquisition as well.
Regions feel wrath of Brexit
The regions have also felt the force of the Brexit vote. US fund manager Apollo has held off on a big off-market deal to buy a Scottish shopping centre and TH Real Estate is considering triggering a Brexit clause on its £70m purchase of Waverley Gate from M&G in Edinburgh.
Northern Ireland agent Eamonn Murphy, from Murphy Chartered Surveyors, said in the two days post Brexit that the two biggest deals he was working on in Belfast had been put on hold: one on behalf of a London developer looking to build 70,000 sq ft of offices; and the other for a client looking to develop a 75-unit student accommodation scheme.
The activation of Brexit clauses inserted into a number of deals leading up to the historic vote could exceed £100m in refunded cash deposits, said law firm Nabarro.
“We have seen that in the majority of the deals that were major commitments on the buy side, they are either trying to pause the deal or they have triggered the Brexit clause,” said Ciaran Carvalho, senior partner at Nabarro. “Where there are clauses, people are exercising them and either saying ‘we’re not going to proceed’ or are going back to negotiations.”
On Monday AXA Investment Managers – Real Assets said it was “considering its options” on the development of the 1.4m sq ft 22 Bishopsgate skyscraper. The Crown Estate followed suit, putting on hold its development plans for Morley House and Duke’s Court. A fall-off in occupier demand and reduction in rents is expected to hit the central London market.
Clarification: This story originally stated that AXA IM - Real Assets was reviewing 22 Bishopsgate due to concerns over “a potential fall-off in occupier demand and a reduction in rent”. However, AXA IM - Real Assets has not cited rents or demand as an issue. “We remain committed to the site, we are continuing to work and we are considering all our options,” a spokesman said. We are happy to clarify this point.
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