CDL Completes $468M Buy of London Mixed-Use Complex From Blackstone

Singapore’s City Developments Ltd has completed its purchase of the St Katharine Docks complex in central London from funds advised by Blackstone for £395 million ($468.2 million).

The property spans more than 500,000 square feet (46,450 square metres) of office, F&B, retail and residential space across a 23 acre (9.3 hectare) campus beside the historic Tower of London. The acquisition was funded through CDL’s internal cash resources and credit facilities, the SGX-listed property giant said Thursday in a release.

The closing price is 21 percent less than the £500 million that Blackstone was said to have asked for the estate in a marketing exercise reported by real estate information provider React News in early 2020. In 2017, Sky News reported that the US investment firm had put the St Katharine Docks on the market for £435 million.

“The current uncertainty in the UK has provided us with strategic opportunities to acquire prime assets and expand our portfolio,” said CDL group CEO Sherman Kwek. “This latest acquisition of the sizeable St Katharine Docks freehold estate, one of London’s trophy landmarks, increases CDL’s total commercial assets in the UK to around £1 billion and enhances our recurring income stream.”

Potential Fund Component

Mingtiandi had reported in January that CDL was in exclusive negotiations to purchase the St Katharine Docks from Blackstone at a reported price of nearly £400 million as the private equity titan faced a fresh set of redemption requests from its property funds.

Blackstone acquired the campus in 2014 as part of its £448 million takeover of Max Property Group, a real estate firm headed by English investor Nick Leslau. Max had paid £156 million for the site in 2011.

CDL’s final £395 million price translates to £751 ($890) per square foot of net lettable area at the complex, which has undergone a £69.5 million repositioning and refurbishment programme.

The office portion, housed in four main buildings, enjoys an occupancy rate of 90 percent and a well-diversified tenant base across the consulting, shipping, education and co-working sectors, CDL said, noting that office leasing accounts for 92 percent of the estate’s income. The overall weighted average unexpired lease term is 8.2 years to lease breaks and 9.4 years to lease expiries.

Kwek said the St Katharine Docks buy would complement CDL’s fund management strategy and provide an option to inject UK assets into listed or unlisted platforms at an opportune time.

“In addition, there are ample asset management opportunities for us to demonstrate our ability to enhance value and improve operational efficiency,” the CEO said.

City Collection Grows

Set on the banks of the Thames River east of Tower Bridge, the docks first opened in the 1820s and now offer about 185 slips for yachts and megayachts, in a marina managed by Florida-based operator IGY Marinas.

Among the complex’s major office tenants are WeWork and QA Ltd, a local tech training services provider. The estate attracts more than 5.9 million visitors annually.

The latest trophy adds to the collection of central London commercial properties held by the developer chaired by tycoon Kwek Leng Beng, including Aldgate House and 125 Old Broad Street.

The two Grade A freehold properties, both acquired in 2018, enjoy stable rent collections and strong committed occupancies of 98.1 and 92.4 percent respectively, CDL said.