Italy’s €12.5bn pension scheme for medical doctors and dentists is on the verge of making its debut acquisition in London with the c.£400m acquisition of a 50% stake in Amazon’s under-construction 600,000 sq ft City HQ, CoStar News can reveal.
The ENPAM pension fund for medical professionals has agreed terms with Brookfield to buy a half share in the Foster & Partners-designed Principal Place, EC2, which will occupy an island site with 45,000 sq ft floorplates, for just under £400m.
While ENPAM, advised by Colliers International under an exclusive global mandate, is yet to undertake comprehensive due diligence on the deal, it would mark the fund’s long-awaiting entrance to the London market should the transaction complete. ENPAM was in the final three bidders in the running to buy the Gherkin last year before it was sold to the Safra Group for £726m, and it has been actively seeking comparable opportunities ever since.
ENPAM, full name Ente Nazionale di Previdenza e Assistenza dei Medici e degli Odontoiatri, represents the pension money of almost 435,000 members.
Brookfield first began testing the market in October over a potential 50% sale of Principal Place, instructing GM Real Estate and Eastdil Secured to find a buyer.
The strategy was similar to that adopted by Brookfield on some of its other City assets in which it has sold down controlling stakes. Also in October it completed the sale of two 40% stakes in 99 Bishopsgate, EC2, to China Life and Qatar Investment Authority, valuing the building at £340m. Last July, Brookfield sold the 328,000 sq ft 125 Old Broad Street to Blackstone for £320m, having previously explored options for a sale of 50% of the asset.
Amazon, the online retailer, took 431,000 sq ft, or 71% of Principal Place’s circa 607,000 sq ft office space last year at a rent of around £50 per sq ft, with an option to take the remaining office space in the 16-floor tower.
In addition, there is around 20,000 sq ft of retail space, including cafés and restaurants offering alfresco dining.
Construction on the development is underway, with completion expected during 2016 before Amazon takes up residence in 2017.
Amazon confirmed in September 2014 that it would be moving to Principal Place in a move that kickstarted development of the scheme.
The £290m mixed-use scheme in Bishopsgate was previously on hold since January 2012 when law firm CMS Cameron McKenna, which had been lined up as an anchor tenant, pulled out of the scheme.
Developer Hammerson subsequently sold its interest in the development to Brookfield, along with the rest of its office developments pipeline.
On confirming the move, Amazon said Principal Place would provide it with “total capacity” for more than 5,000 London employees.
UK boss of Amazon Christopher North said it would give the firm the ability to hire thousands of new employees in London over the coming years.
Amazon’s current head office is in Slough, from where it first started running its UK operations back in 1998, but the firm said it would now make Principal Place or its 210,000 sq ft office at 60 Holborn Viaduct its new UK headquarters.
At the end of last year, Brookfield Property Partners agreed a £280m development loan for Principal Place to finance the construction of the office block on the border of Liverpool Street and Shoreditch.
Santander and LBBW provided £105m each, while Crédit Agricole CIB provided a £80m commitment. Pricing on the development facility was sub 300 basis points over three-month LIBOR.
ENPAM and Colliers could not be reached for comment.