The market could hardly have been more different when React News launched in June 2019. Outside the retail sector, returns were good and the deals were flowing.
React quickly built up a reputation for being first with the biggest transactions. Early scoops included Unite’s £1.4bn deal to buy Liberty Living from Canada Pension Plan Investment Board, Amancio Ortega’s £600m purchase of the Post Building, and CC Land’s acquisition of a 50% stake in the £1bn regeneration of Whiteleys shopping centre in Bayswater. Let’s also not forget, Hammerson putting Value Retail on the market, a story that is still rumbling on five years later.
The Covid era
Deal flow came to an abrupt halt in 2020 as the Covid-19 pandemic forced governments to resort to lockdowns. React totted up 700,000 sq ft of leasing deals that were put on hold. Investment deal after investment deal fell apart, including some that had reached an advanced stage, including Hammerson’s £400m sale of its retail park portfolio. Orion Capital Managers had unconditionally exchanged contracts, but was still prepared to walk away and lose its £21m deposit.
React kept readers abreast with all the twists and turns leading up to the collapse of Intu, and the subsequent carving up of the company’s assets. We also revealed Capco’s acquisition of Samuel Tak Lee’s stake in Shaftesbury, a prelude to the merger of the two companies a couple of years later.
It was not all doom and gloom in 2020. Appetite for beds and sheds quickly returned over the summer. We brought readers the scoop on the £850m sale of Dolphin Square and the ins and out of the deal that never was – Lone Star’s sale of Wembley Park.
The year also marked the launch of our dedicated daily Europe bulletin. At the time, big, often multi-jurisdictional logistics deals, were all the rage. Some of our top stories included JP Morgan Asset Management’s €550m purchase of a portfolio of prime logistics assets from John Cutt’s Mountpark and Gazeley’s acquisition of Goodman’s holdings in Central and Eastern Europe.
The theme continued into 2021. We revealed that GIC had bought out EQT Exter’s €3.1bn third European fund at a yield of just 3.5% in the biggest logistics deal of the year. There were numerous other big deals that topped our bulletins, often with Blackstone as buyer, including its £1.7bn purchase of Asda’s distribution network and the acquisition of a $2.8bn transatlantic portfolio from Cabot Properties.
There was plenty going on in other markets as well. French insurer CNP entered talks with CDC Habitat to take majority ownership of a €2.5bn French residential portfolio in a year that also saw numerous new build-to-rent platform launches and the emergence of single-family housing as a hot new trend. There was a boom in life sciences – prompting the launch of the first real estate IPO on the London Stock Market since 2016 with Life Sciences REIT.
Meanwhile, the office market was busy after a comparatively slow 2020. Highlights included British Land’s £1.25bn sale of 5 Broadgate to Korea’s National Pension Service and DIC’s purchase of Munich’s 02 Tower for more than €500m.
Even the retail market perked up following its annus horribilis. One of our biggest stories of the year was that the family behind Selfridges had put the business up for sale for £4bn. Further along the street, we revealed Ikea’s purchase of Topshop’s flagship, and in the prime shopping centre market that Lendlease finally sold its 25% stake in Bluewater.
A new reality
However, warning signs were starting to emerge. In March 2021, off the back of an uptick in bond yields, React explored how higher inflation and interest rates could upend the property market.
As 2022 began, inflation was starting to run hot, but concern was mainly limited to its impact on construction costs rather than the investment market, which remained busy until the start of summer. Big deals continued, none bigger than Blackstone’s €21bn recapitalisation of Mileway – the largest ever private markets trade. GIC became the largest outside shareholder in the last-mile logistics specialist as part of the deal, which looked in danger of being derailed by a last-minute bid from Prologis before the listed logistics giant withdrew its interest.
Other highlights from the first half of 2022 included Singapore’s Ho Bee purchase of the Scalpel office tower in the City for £718m, Nuveen’s £170m sale of its stake in the Bullring shopping centre in Birmingham and Hillwood’s sale a €925m pan-European portfolio to CBRE Investment Management.
The market then slowed dramatically over the summer. One or two big deals such as Prologis’ purchase of Mark’s Crossbay for €1.6bn and Landsec’s £809m sale of 21 Moorfields did cross the line in the autumn. However, others fell apart or became the subject of protracted disputes such as Barings’ purchase of the Zeus portfolio from NFU Mutual, which only completed a year later following a legal process.
As the market turned, we looked back at the lessons of the past. React News columnist and Sunday Times associate editor Oliver Shah marked the Queen’s Jubilee, by reviewing 70 years of boom and bust in the property industry.
As the year progressed, the fallout from the market slowdown became clearer. We revealed how several institutional funds had moved to defer redemptions amid rising outflows. Stress also spread to agency firms. Avison Young offered all UK staff voluntary redundancy as CBRE and JLL began cutting jobs. Investment managers were not immune either. Round Hill Capital hit the headlines in December when it put the vehicle that employed most of its UK staff into liquidation.
It was more of the same in 2023. More job cuts followed at JLL in the UK and Germany, Eastdil and Patrizia among others. Australian billionaire René Benko emerged as the poster boy of the downturn. We charted the fall of his complex real estate empire, revealing how his Signa Group was looking for €800m of new financing early in the year in one of the first signs of trouble.
Concerns were also growing over parts of the occupier market. In spring 2022, Amazon’s announcement that it intended to slow the take up of new warehouse space had sent a chill through the market, and in 2023, the e-commerce giant went a step further by looking to offload space. We revealed that it was looking to sublease 20 locations in Germany and Italy. However, as the year went on, it became clear that other sources of demand were emerging in Amazon’s place, and that the market was returning to pre-pandemic norms rather than falling through the floor.
It was a different story for the office market. We broke the news at the end of 2022 that Meta no longer intended to occupy a 310,000 sq ft office at 1 Triton Square. More followed in 2023, as React revealed that HSBC was considering leaving Canary Wharf for the City and Microsoft had abandoned a 500,000 sq ft London HQ search.
In central London, there was at least a recognition that demand for quality space still outstripped supply, but the same could not be said of other locations as we explored in an analysis on the good, bad and the ugly of the office market. Signs of distress started to appear as assets such as One Poultry in the City and 5 Churchill Place in Canary Wharf ran into trouble.
One less likely example of distress emerged in the residential market. We revealed that London’s most expensive house, owned by a member of the Saudi royal family, had been put on the market for £250m after falling into receivership.
As 2024 started, the investment market remained quiet although corporate activity started to pick up. React broke news of a series of M&A deals including LondonMetric’s purchase of LXi REIT, Tritax Big Box’s merger with UKCM and just last week, Bellway’s eying of deal to buy Crest Nicholson.
We have also revealed news of a series of big names looking to set up shop. Last week came the scoop that KKR’s UK head of real estate, Charles Tutt, was leaving to start his own firm, following on from Principal Real Estate’s chief executive Andrew Thornton a week earlier. Since the start of the year, former TPG equity partner Michael Abel has launched Greykite; Lone Star’s former co-head of European real estate Angus Dodd established Wandle Real Estate Partners; Tristan’s managing director for UK investments Nicho Jenkins left to help establish Marchlyn; and Pat Gunne made his return by forming a £700m London offices venture with Aermont.
