London City Office sells to SVP at 62% discount to offer price
Opportunistic credit firm Strategic Value Partners agreed to acquire a City of London property at a discount of about 60% from the initial asking price
(Bloomberg) -- Opportunistic credit firm Strategic Value Partners agreed to acquire a City of London property at a discount of about 60% from the initial asking price, highlighting the huge decline in value for all but the most sought-after office buildings.
SVP will pay more than £60 million ($77.8 million) for Senator, an office development at 85 Queen Victoria Street, according to people with knowledge of the transaction. The property was originally offered for sale in 2021 by a venture including Legal & General Plc’s asset management arm for £157 million, the people said, asking not to be identified as the discussions are private.
SVP and Legal & General declined to comment.
The end of the cheap money era has weighed heavily on all commercial real estate values but shifting demand for workspace caused by the pandemic has created stark winners and losers in the office market. Companies have focused on the newest, most centrally located and greenest properties as they look to encourage staff back to the work space.
That’s resulted in more pronounced drops in valuation for older, less environmentally friendly buildings or even newer properties in slightly off-pitch locations. Senator, which is about a five-minute walk from St Paul’s Cathedral and around the same from a rail station, has been fully refurbished but remains partially leased several years after the works were completed.
Still, a shortage of new construction and a gradual return to the office is luring some investors back into the market, betting rents and valuations will rise thanks to the lack of new space.
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