Value-Add Manager Makes £300M Bet On Regional Office Growth
A value-add fund manager backed by M&G is in talks to strike one of the largest-ever UK office deals outside of London.
BauMont Real Estate is the preferred bidder to buy the 650K SF Paradise office scheme in central Birmingham for about £300M, Green Street News reported.
The price would represent a net initial yield of about 7.5%, Green Street said, but the deal has reversionary potential — rents at the scheme range from £30 per SF to £40 per SF, but some deals in good-quality Birmingham city centre offices have been struck of late at £50 per SF.
Paradise was developed and is owned by a joint venture between UK fund manager Federated Hermes and Canadian pension fund CPPIB. Three completed buildings are up for sale: One Chamberlain Square, which is leased to PwC; Two Chamberlain Square, which is leased to multiple tenants; and One Centenary way, which is leased to Goldman Sachs.
Eastdil Secured was appointed to sell the scheme last year, along with the Wellington Place scheme in Leeds.
BauMont has offices in London and Paris and has focused on Parisian office deals and UK regional office acquisitions in recent years. Last year, it bought the 125K SF Quartermile One office scheme in Edinburgh.
UK asset manager M&G bought a 65% stake in BauMont in 2024, at which point, the firm had about €1.5B in assets under management. M&G typically buys core properties for its pension fund clients, with much of the money coming from insurer Prudential, its ultimate owner.
The deal to buy BauMont was designed to expand its footprint into value-add real estate, and as part of the acquisition, M&G invested €200M (£175M) into BauMont’s most recent value-add fund.
