Allianz bets on London's West End with £401m office

London

ALLIANZ's real estate unit will take a majority stake in a portfolio of buildings owned by British Land in London's virus-roiled West End district.

The insurance giant has agreed to pay £401 million (S$718 million) for a 75 per cent interest in the office properties located in Marylebone, said a statement on Wednesday.

The deal, which includes 10 Portman Square, Marble Arch House and York House, is due to complete in January.

It is the latest sign of global investors willing to bet on the long-term resilience of the world's biggest business districts even as the coronavirus pandemic has reduced their appeal.

Deals for West-End buildings have picked up in the second half with investors seeking out buildings with long leases, lured by returns that dwarf those available from other safe haven assets, including government bonds.

"This transaction demonstrates that like us, investors remain confident in the long-term prospects for high-quality assets in prime London locations," British Land chief executive officer Simon Carter said in the statement.

British Land has ramped up sales of buildings with long leases that still command high prices in order to reinvest capital in new developments and to shore up its balance sheet, as the company's retail tenants continue to miss rental payments.

The deal with Allianz is at a premium to the buildings' September valuation, said the statement. BLOOMBERG