Brookfield Said in Talks to Buy $732 Million London Tower

  • City of London building would be biggest sale agreed this year
  • CityPoint managed by receiver after 2012 loan default

Brookfield Asset Management Inc. is in exclusive talks to acquire CityPoint Tower, a London office building less than a mile from the Bank of England, according to two people with knowledge of the matter.

The 36-story building will probably sell for less than 600 million pounds ($732 million), the people said, asking not to be identified because the plan is private. The skyscraper’s appraised value is 660 million pounds, according to a June report sent to investors in commercial mortgage-backed securities linked to the property. Brookfield and KPMG LLP, the receiver appointed to manage the property, declined to comment.

A Beacon Capital Partners Inc. fund defaulted on 429 million pounds of loans secured by the building in 2012. Brookfield had acquired the junior loan linked to the building in the City of London financial district in 2014, CoStar News reported at the time.

Office values in the City fell the most in at least seven years after the Brexit referendum on concern that vacancy rates will rise if companies delay expansion or move some workers abroad. More than 1,900 firms are likely to review their office-space requirements in the U.K. capital following the vote, real estate researcher DealX said in July.

Brookfield Chief Executive Officer Bruce Flatt told shareholders in August that there is a great deal of uncertainty about the effect of the Brexit vote on the 12 businesses it owns in the U.K., particularly its offices. The company, which owns a stake in London’s Canary Wharf financial district, is committed to London real estate, he said.

Sticking With London

"While most people predict that real estate values will go down in London, we believe that once all this settles out, due to investors’ thirst for yield, quality properties with assured income may well be valued higher than they were prior to Brexit," he wrote.

CityPoint would be largest deal for a U.K. commercial property agreed to this year, according to broker Savills Plc. Investors spent 8.7 billion pounds on offices, stores and warehouses in the third quarter, 42 percent less than the year-earlier period, according to a Costar Group Inc. report published this week.

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