Office deal set to defy financial crisis

A £400-million deal is about to be made by the government of Kuwait to acquire the Bank of America’s European headquarters. No office transaction of this size has been made in England since the start of the financial crisis and this could be a prominent sign of recovery. 

Negotiations are underway between St Martins Property, working on behalf of the Kuwaiti government, and the owner, private equity group Evans Randall, with intention of transferring the ownership of the Bank of America’s 536,000-square-foot office tower in Canary Wharf to the Kuwaiti government. 

Despite this being the largest deal since the start of the recession, Evans Randall is still making a loss because the building was originally acquired by them for £452 million in 2007 from the Royal Bank of Scotland. Credit Suisse is currently occupying 14 storeys until 2027 but ten of these floors have been sublet to the Bank of America. 

The appeal of the property’s location comes from its being situated right next to the Crossrail station which is currently under construction and which will provide excellent communication between the Canary Wharf banking hub and Heathrow Airport. As Canary Wharf has left the City behind to become London’s major financial centre, providing office space for the largest number of bankers in Europe, the area has started to appeal to major investors around the world – such as the government of Kuwait. 

Many major investors being seen in the London office market come from the Middle East and interest in London’s commercial property from this part of the world has risen over the last year. “The demand for London offices has been so strong that the UK capital now accounts for about a third of the value of all commercial property deals in Europe, with the bulk of investment focused around the City, the West End and Canary Wharf”, notes Eugene O’Sullivan, director at Morgan Pryce, London’s commercial property agent. 

St Martins Property is currently one of the most active Middle Eastern sovereign wealth investors in the London property market and already owns the Willis Building, the fourth-largest in the Square Mile, and Investec’s UK headquarters near St Paul’s Cathedral.

Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.