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British Land and Singapore’s GIC have sold half of Citadel’s new City of London office tower, currently under construction in Broadgate, to Abu Dhabi’s Modon Holding.
A deal to attract a new investor to 2 Finsbury Avenue, a third of which is pre-let to Ken Griffin Citadel and due for completion in 2027, has been highly anticipated as a sign of international investors’ growing confidence in London’s premium office market, despite concerns over post-Covid demand.
Modon is an Abu Dhabi-listed real estate group, backed by sovereign wealth fund ADQ and International Holding Company, chaired by Sheikh Tahnoon bin Zayed al-Nahyan, one of the most powerful men in the United Arab Emirates.
Simon Carter, chief executive of British Land, said the deal was “a vote of confidence for both Broadgate and the town”.
FTSE 100 UK owner British Land and GIC will each retain 25 per cent of the tower through their Broadgate joint venture.
The willingness of a state-backed international investor to bet on office development in the city is a positive sign for the market after a brutal two-year downturn.
According to MSCI, investment in London offices in the first three quarters of 2024 was the lowest since 2003, with little investor interest in large blocks. Blackstone’s offer of around £300 million to acquire the Skyscraper “Can of Ham” was seen as a positive indicator, but the deal with seller Nuveen fell through last year.
Modon managing director Bill O’Regan said: “The quality and rental potential of 2 Finsbury Avenue, together with the experience and reputation of our partners, has made it a compelling entry for Modon into the market. London real estate. »
2 Finsbury Avenue will be made up of two towers of 21 and 36 storeys, connected by a 12-storey podium. This is a major expansion of the Broadgate campus in the City of London, which already houses UBS.
Financial terms of the sale were not disclosed Friday. British Land has valued the development at £310m in September 2024, with £628m of costs still to come before the project is completed.
Ken Griffin’s hedge fund Citadel and its sister company, market maker Citadel Securities, agreed to lease 250,000 square feet last spring, marking a two-thirds expansion of Citadel’s London offices. The deal includes an option for the American company to increase its lease to half the building.
The deal represented a record rent for the City of London at the time, British Land said. The owner then launched a search for a new investor, saying he wanted a partner to “share [the] risk and cost” of the project and free up capital for its other developments.
Many developers have put the brakes on new flagship office projects sharply in recent years, as construction and financing costs rose, office values faltered and investors worried about the impact of working from home on demand for offices.
These factors have resulted in a limited supply of high-quality buildings on the market, allowing landlords to increase rents.
Carter said he expected a “significant imbalance between demand and supply of new and substantially renovated space, particularly in the City, leading to strong rental growth at the high end of the market.” .
CBRE and Knight Frank advised British Land and GIC. Cushman & Wakefield represented Modon.
