Days after Cushman & Wakefield released a report that claimed investors discount U.S. office buildings with high WeWork tenancies, one of South Korea’s largest investors is in talks to buy a London office property … entirely filled by WeWork.
Holding company Hana Financial Group is in discussions to buy the landmarked One Poultry Building in Central London from Aermont Capital, according to Bloomberg.
Aermont, which bought the property for approximately $140 million in 2014, has been seeking $240 million for the property. Last year, WeWork inked a deal to occupy the entire 110,000-square-foot office building, which is also undergoing a large revamp.
The potential deal comes amid intense interest from Asian investors in London commercial properties. A recent study from Cushman found $1.1 billion in direct investments from South Korea in the first six months of 2018, all despite the prospect of Brexit.
The report also projected that Korean pension funds and security firms will have committed $4 billion to British property investments by the year’s end.
These newcomers to the market are likely encouraged at the prospect of higher returns than other Western European capitals and lower currency hedging costs than in the U.S., where interest rates have been on the rise.
Last week, Cushman & Wakefield released an investment-sales study that analyzed 17 U.S. office deals between 2016 and 2017. The study found that properties with large WeWork footprints traded at capitalization rates that were higher than the overall market for comparable buildings, meaning investors saw those buildings as riskier bets. Of the 17 buildings studied, all eight where WeWork occupied at least 40 percent or more of the space traded at higher cap rates than the average. [Bloomberg] — Patrick Mulholland