Prologis Delays U.K. Deals as Buyers Seek `Brexit' Vote Get-Outby
Buyers ask for clauses allowing them to pull out of deals
Value of commercial property deals falls to lowest since 2011
Prologis Inc., the world’s largest owner of industrial real estate, would like to buy more property in the U.K. That’s unlikely to happen until the country decides whether it wants to stay in the European Union in June.
“For the sake of another quarter, let’s just wait,” Ben Bannatyne, president of Prologis in Europe, said in an interview at the MIPIM real estate conference in Cannes, France. “We have got a few things bubbling in the U.K. which we might just push out until after the referendum.”
The value of U.K. commercial property deals fell to almost 2 billion pounds ($2.9 million) in February, the lowest since April 2011, according to data compiled by Capital Economics Ltd. Fears around a ‘Brexit’ vote may have played a role in the decline, the London-based researcher’s chief property economist Ed Stansfield said in a March 11 report.
Landlords determined to sell are allowing clauses in deals which mean buyers can pull out of purchases if the U.K. votes to leave the political bloc, said Aref Lahham, a founding partner at European real estate investment firm Orion Capital Managers.
“There will be deals that include ‘Brexit clauses’,” he said. “We had a deal like that in East Kilbride before the Scottish independence referendum, which we closed shortly after the vote.”
The U.K. had the second largest number of delegates at the conference, behind only the French, even as the impending vote means there are less deals to do. Fewer British properties were offered for sale than normal at the event, which draws investors from around the world, as investors opt to wait for the result of the vote, said Gordon DuGan, chief executive officer of Gramercy Property Trust, in an interview.
“There is no prize for buying deals now when there is such an important decision,” said Gary Moore, head of U.K. strategic partnerships at LaSalle Investment Management Inc., which manages $58.2 billion. “A lot of stuff is falling out of bed.”