Starwood seeks to sell London tower over Brexit fears
Starwood Capital Group LLC is in talks to sell its interest in a planned London tower over concerns that Brexit will hurt demand for office space, three people familiar with the plan said.
Starwood, based in Greenwich, Connecticut, plans to dispose of its stake in the One Braham development in east London to venture partner Aldgate Developments for more than Stg£60m($75m), the people said, asking not to be identified because the matter is private.
Aldgate will probably seek a new partner before building the 18-storey tower, which will have space for about 3,650 workers, they said.
Spokesmen for Starwood and Aldgate Developments declined to comment.
More than 1,900 firms will probably review their office-space requirements following the Brexit vote, real estate researcher DealX said last July. Properties that have short leases and need renovations may see their values fall further than those with longer rental contracts, Bloomberg Intelligence analyst Susan Munden said in a note issued on December 12 last.
One Braham was set to be the second office building developed by Starwood and its venture partner in Aldgate, an area on the eastern border of the City of London financial district that has become popular with technology companies. The two firms built the Aldgate Tower and fully leased it to tenants including Uber Technologies Inc. before selling it to China Life Insurance Co. and Brookfield Property Partners LP for Stg£346m (€404m) last April.
Starwood may become a lender to the development after selling its equity stake, the people said, adding that no deal has been reached and negotiations are ongoing. About 4m sq ft of space planned for development in the City of London now has an uncertain future due to Britain's departure from the European Union, broker GM Real Estate said last September.
In another Brexit-related development, Madrid is close to approving a project to develop and refurbish an area in the north of the city as it makes its pitch to accommodate companies that need to leave London, a senior city official said.
The project, a joint venture between Banco Bilbao Vizcaya Argentaria SA and Grupo San Jose, would involve developing and refurbishing 3.1m sq m - an area almost as big as Central Park in Manhattan - of land for homes, offices and public spaces.
Spain is highlighting low corporate taxes and cheap property as it makes its pitch.