A major real estate project backed by the famous value hedge fund Baupost Group appears to be moving ahead with an anticipated profit of over £30 pounds ($50.32 million).
Sales efforts to start in fall as phase 1 completion targeted January, 2015
In a PowerPoint presentation from Helical Bar plc (LON:HLCL), a UK real estate developer who is partnering with Seth Klarman’s Baupost on property development in Bart’s Square, London, said plans for the buildings had been approved. The bulk of development covers two office building projects that will include 215 residential apartments and 21,800 square feet of retail development next to a 202,000 square foot office complex, for a total of 19 buildings.
Helical Bar plc (LON:HLCL) owns 33 percent of the development while Baupost Group owns 66 percent. The group purchased the site, located next to London’s St Bartholomew’s Hospital, in 2011.
At the time, a timeline was set to begin work on the project in 2014 and have it complete by 2018, which appears on schedule. Work on the project could get tricky, as it is using existing historical buildings that are of “particular architectural merit.” The core architectural significance of the buildings would be maintained and in some cases development would take place behind the retained facades and other areas of architectural significance.
Phase 1 of the project is targeted for completion in January of 2015 with sales operations starting this fall and will include 94 residential units. The total value of the property when completed is estimated at £540 pounds ($905.80 million)
Blaupost’s real estate investing has been profitable
Klarman’s entry into the real estate market was noted in May of 2011 when Jim Mooney, a managing director of the Boston-based hedge fund, was dispatched to oversee commercial investments in London in the wake of the EU debt crisis. As previously noted in ValueWalk, real estate is becoming more important to the hedge fund as it has consistently generated revenue in the arena. We reported that real estate investments generated profits of $350 million to the fund in 2013, as they sold into strength. Investments included office buildings, hotels and multifamily properties to even Japanese self storage facilities
Just this past April ValueWalk reported Baupost bet big on Spanish real estate, aupost just made a more than $200 million (160 million euro) investment in Spanish commercial real estate. Baupost received seven shopping centers and a shipping and logistics park in return for its cash. GreenOak Real Estate joined Baupost as a junior partner on the deal. Baupost purchased the lot of shopping centers, most near Madrid, from the Dutch real estate group Vastned, who sold the real estate assets to raise capital to reduce their debt load.