Brookfield Office Properties Inc. (BPO,BPO.TO) on Tuesday said it has agreed to buy a portfolio of premier office buildings and a development site in the London financial district from Hammerson Plc (HMSO.L) for 518 million pounds or $829 million.
Brookfield, which owns, develops and manages premier office properties in the United States, Canada and Australia, said the portfolio consists of four operating assets totaling 884,000 square feet, which is being acquired at an initial yield of 6 percent.
The major operating assets included in the deal are 125 Old Broad Street - a 328,000-square-foot class A 26-story office tower at the site of the former London Stock Exchange, which is 98 percent leased to various tenants. Brookfield said it will own a 50 percent stake in this building along with the two existing joint venture partners.
The deal also includes 99 Bishopsgate - A 26-story, 339,000-square-foot office building, adjacent to the 100 Bishopsgate development, which Brookfield owns in a 50/50 joint venture with Great Portland Estates. Brookfield will also buy Leadenhall Court - A 109,000-square-foot office building, which is fully leased until March 2014 to a single tenant.
The deal also includes additional smaller assets such as 1 Puddle Dock and buildings on Shoreditch High Street adjoining Principal Place.
The company has also agreed to acquire the Principal Place development site with in-place planning consent for an office and residential tower comprising 857,000 square feet.
The planning consent has been granted for a 599,000-square-foot office tower, a 51-story, 237,000-square-foot residential tower, and ancillary retail, the company said. The site is located between the Liverpool Street and Shoreditch High Street rail stations.
Brookfield expects to close the purchase of 99 Bishopsgate, Principal Place and the smaller assets on September 30, while the acquisition of 125 Old Broad Street and Leadenhall Court will close in June 2013.
Brookfield said it will fund the deal through the assumption of $106 million of debt, additional property-level debt expected to be put in place before close, as well as from available cash resources. Dennis Friedrich, president and global chief investment officer of Brookfield, said, "This transaction is a unique opportunity ... to acquire a portfolio of top-quality office assets and a well-located development site in the London market. This acquisition aligns with our strategy of providing front-office accommodations to the world's most prestigious tenants by owning and operating premier properties that are well-located within the most dynamic global markets."
Brookfield shares closed Monday's regular trading at $16.55, down $0.10 or 0.60 percent. In the extended trading, shares grew $0.03 or 0.17 percent to $16.58.
In London, Hammerson shares closed Monday's trading at 417.70 pence, up $1.60 or 0.38 percent.
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