Blackstone set to cash in on Broadgate sale

 
Michael Bow
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US private equity giant Blackstone is set to reap a multi-million pound windfall after pushing forward plans to sell its stake in the Broadgate estate, home to some 30,000 City workers in London.

The New York based business, the biggest real estate manager in the world, is in line for an eightfold increase on its investment in Broadgate if it sells its equity stake at a price in line with the area’s current valuation of £3.1bn. A deal at this value would make Blackstone’s stake worth around £600m, delivering a stellar return for the firm, which bought the stake from British Land for a snip at £77m in 2009 at the height of the financial crisis.

The future of the estate and Blackstone’s plans is likely to crop up when British Land reports its third quarter management statement tomorrow. The estate is home to some of finance’s biggest names including UBS, Deutsche Bank, Icap and a host of money managers, and around 30,000 employees work out of 16 buildings throughout the district.

City A.M. ran a campaign backing successful plans to stop part of the area being listed by English Heritage in 2011, in order to promote development.

As part of the deal, Blackstone – through its Real Estate Partners Europe III and Real Estate Partners VI funds – took on £987m of third party debt but it is still not clear who would take on the debt when the group cashes in its equity stake. Blackstone declined to comment.

A sale would be the latest in a string of crisis-era London property coups for Blackstone. It is currently mulling plans to sell its investment in Chiswick Park. With a price tag of £800m, a sale would be at around a 65 per cent premium on the £480m Blackstone paid for it. Blackstone is also understood to have snapped up the campus at Devonshire Square for £340m back in May, continuing its deal making presence in London’s financial district.