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Blackstone’s roughly £300mn bid to acquire the “Can of Ham” skyscraper in London has fallen through, the latest sign that big-ticket office sales remain stalled by disagreements over what buildings are worth.
The US group, the world’s largest commercial real estate investor, had been in exclusive negotiations to acquire the building with an offer just above £300mn, according to people familiar with the process. But the seller, Nuveen, was unwilling to accept an offer below the £322mn asking price.
The collapse of the talks, first reported by Green Street News, stymies what would have been the biggest office deal in London for two years.
Blackstone’s willingness to bid on a large, top-quality office building is nonetheless a positive sign for the office market after a bruising two years. Investment into London offices in the first nine months of the year was the lowest since 2003, according to MSCI.
But the price on offer from the US group is below where many owners are still valuing their tower. Nuveen had been looking to improve on the asking price, one of the people said.
The two investors’ deadlock over price suggest neither buyers nor sellers are ready to compromise far enough to break the dealmaking drought.
“There is a gap in price expectations between buyers and sellers . . . suggesting there is further to go before market liquidity returns,” MSCI analyst Tom Leahy wrote in a note.
Blackstone and Nuveen declined to comment.
Office vacancy rates have risen across major cities following the Covid-19 pandemic and the increase in hybrid working, hitting a 20-year high of about 10 per cent in London, according to data from CoStar.
Demand for office space from companies is sharply divided, with competition for the best space with modern amenities and green credentials, but scarce interest in older or badly-located buildings.
The Can of Ham at 70 St Mary Axe — named because of its distinctive rounded shape — was seen as a test of demand for good-quality buildings. It is fully let with long average lease terms to tenants including law firm Sidley Austin, National Bank of Canada and Samsung Electronics.
Nuveen, the asset management arm of US retirement provider TIAA, was the original developer of the 21-storey tower, completed in 2019. It previously tried to sell in 2022 for about £400mn.