City landmark The Scalpel goes on sale for £820m

One of the City of London’s most recognisable office towers is going up for sale, carrying a near-£1bn price tag that will test investor appetite for a market buffeted by coronavirus. 

The Scalpel is being marketed to potential buyers for around £820m by current owners WR Berkley, the American insurance group, according to people with knowledge of the deal. 

If it achieved that price, it would be the most expensive office building sold in London since Citigroup bought its Canary Wharf offices for more than £1bn in April last year from Middle East-backed private equity group AGC Equity.

The sale process, first reported by Property Week, has been launched despite City offices lying largely empty, and will be a litmus test for investor faith in the future of workplaces and in London’s post-Brexit resilience.

“Obviously there are a lot of question marks over the degree to which we will continue working from home,” said one person involved in the sale. But, he added, “London always scores well [with investors]: there’s liquidity in the market, high-quality assets with long leases and the current weakness of the pound.”

The selling agents, Eastdil Secured and Cushman & Wakefield, are aiming to drum up interest from “well-capitalised international investors”, said the person.

Following the outbreak of coronavirus in the UK, London’s office market fell into the doldrums. In the early months of the pandemic, sales stalled as valuers were barred from entering buildings and overseas buyers were unable to travel. 

But activity has returned in the last month as restrictions have eased. One London Wall Place, the headquarters of asset manager Schroders, was sold by Brookfield and Oxford Properties to AGC for £480m earlier in October. In the same week, Singaporean investor Suntec took a £430m stake in Nova, an office, retail and residential scheme in Victoria.

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Despite lingering uncertainty, The Scalpel would be better placed than most office developments to find a buyer, said James Beckham, head of London investment properties at agents CBRE. “It’s freehold, a tower and an iconic building.” 

The most likely buyer, he added, would be an ultra-high net worth investor from Asia, typically Hong Kong or Singapore. 

“Global capital continues to be drawn to the London market, focusing on large-scale trophy buildings. Even given uncertainties around occupational strategies, investors are taking the long-term view,” he said.

The 36-storey, 406,000-sq ft tower was designed by Kohn Pedersen Fox and completed in 2018. The ‘Scalpel’ moniker was coined by the Financial Times. WR Berkley continues to use the building as its European headquarters. Other tenants include National Australia Bank and Lombard International. 

WR Berkley and Eastdil Secured could not be reached for comment; Cushman & Wakefield declined to comment.


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