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European Giants Put £1.2B Into London BTR And Offices

Two giant European institutional investors have struck deals to invest more than £1.2B into London build to rent and offices.

AXA Investment Managers - Real Assets has completed its purchase of Dolphin Square, in what is the largest ever deal for a single UK rented residential asset. Previous reports have put the value of the deal at around £850M. 

Dolphin Square is a London landmark with a rich history dating back to 1937, including having been the headquarters of General Charles De Gaulle's Free French during World War II. The estate provides 796K SF of residential accommodation, commercial and amenity space spread across 13 individual houses centred around a 3.5-acre landscaped garden square. Of the 1,233 residential units, there are 165 serviced apartments, 80 corporate housing units and 186 affordable units, with a broad variety of apartment sizes on offer ranging from studio to five-bed.

The riverside estate comprises extensive retail and leisure facilities including a fitness club, swimming pool, spa, squash and tennis courts, and a convenience retail arcade. The entire complex is managed by an on-site management company, acquired as part of the transaction.

AXA bought the scheme from Westbrook, which first bought into the building more than 16 years ago and was planning a significant redevelopment, planning permission for which has already been turned down once. It will be interesting to see if AXA pursues a similar strategy. A statement accompanying the deal was ambiguous, saying: “The estate stands in good condition but presents an opportunity for a wholesale refurbishment over the long-term to enhance its sustainability credentials and provide a modern environment for tenants to live and enjoy.”

“London’s private rented market remains significantly undersupplied and, with over €20B invested into the sector globally, residential assets classes which are supported by structural demographical drivers remain one of our high conviction calls,” AXA European Head of Transactions John O’Driscoll said.

Elsewhere, German insurance company Allianz has provided a £400M loan secured against a portfolio of five central London offices owned by Lazari Investments. It is the largest single loan Allianz has ever underwritten in Europe, and the seventh loan it has underwritten secured against London assets — it has never done an equity deal in London, but has been one of the biggest single lenders in the city in the past few years. 

The portfolio totals 630K SF and the loan was provided by Allianz’s Luxembourg-based debt-fund. 

The Lazari family is a low-profile but highly successful private investor. In the last financial accounts available for the company, for the year to 31 March 2019, the family company saw its portfolio rise in value by 2% to £3B. Like other private investors such as Inditex founder Amancio Ortega or the Grosvenor Estate, its success has been founded by focusing on the West End, where 93% of its portfolio is located.