WeWork in Talks to Buy $785 Million Blackstone London ProjectBy
Flexible-office company WeWork plans to buy Devonshire Square
Deal would be WeWork’s second major property investment
WeWork Cos., the $20 billion shared-office business, is in exclusive talks to buy a 12-building campus in the City of London financial district from Blackstone Group LP, two people with knowledge of the plan said.
New York-based WeWork has agreed to pay more than 600 million pounds ($785 million) for Devonshire Square, a group of former warehouses close to Liverpool Street rail station, the people said, asking not to be identified as the deal is not yet signed. Spokesmen for Blackstone and WeWork declined to comment.
The estate, which has more than 620,000 square feet (57,600 square meters) of offices, stores, restaurants and a private members club, was pieced together and developed by the East India Company from 1768 to 1820. The warehouses were originally designed to store silk and textiles and were later used for tea, ostrich feathers, oriental carpets, cigars, drugs, spices and other artifacts.
Serviced office and co-working companies have become the dominant source of demand for London office space this year as more tenants seek flexibility and WeWork continues to attract substantial funding that has enabled its rapid growth. The company, which was founded in 2010, currently operates 16 locations in the U.K. capital and has confirmed plans to open eight more, according to its website.
WeWork will take over management of the 5-acre (2-hectare) estate, which covers the equivalent of four football fields, when the deal is completed as well as occupying the vacant space and adding more facilities, the people said.
The deal would be WeWork’s second major property purchase after the company announced plans on Tuesday to buy the flagship Lord & Taylor building in Manhattan with Rhone Capital LLC for $850 million. The company has already bought two small offices in London, which it plans to modernize, and has appointed Eastdil Secured LLC to source credit to finance the Devonshire Square purchase, the people said.
Blackstone bought Devonshire Square for about 340 million pounds in 2012 and has modernized the campus and filled office space vacated by insurance company Aon Plc.
Blackstone is reaping significant returns from the London property portfolio it assembled in the wake of the global financial crisis. It sold the Lacon House office building for 285 million pounds in August and is said to be offering the Cannon Bridge House building for sale for about 250 million pounds.