London deal stalls amid Brexit worries
Union Investment has delayed the purchase of an office building in the City of London financial district because of the risk that the UK may vote to leave the European Union, said Frank Billand, chief investment officer of the company's real estate unit.
"Until a decision has been made we are being cautious with speculative investments in London which have leasing risk," Mr Billand said. "We're a bit apprehensive because we don't know how things will turn out."
The German investment company suspended talks to buy 51 Eastcheap for about £50m (€64.5m) at the end of February, two weeks after it secured exclusivity for the deal, according to three people with knowledge of the matter. Union and development partner City Office Real Estate planned to extend and refurbish the building, said the people, who asked not to be identified because the terms of the deal are private.
Mr Billand declined to discuss the details and a spokesman for City Office declined to comment.
Demand for commercial property investments in the UK will probably be subdued in the run-up to the EU referendum in June, Savills boss Jeremy Helsby said in an earnings report on Thursday. Land Securities CEO Robert Noel said in February that a vote to leave the political bloc would cause demand for office space to fall and values could plummet.
Union, based in Frankfurt, manages €252bn of assets.. That includes €30bn of properties, making it Germany's biggest manager of real estate mutual funds. (Bloomberg)