The Blackstone Group L.P. (NYSE:BX) has agreed to sell its share in Broadgate, a large office complex in London, today according to a report from Bloomberg. The sale values the investment company’s share of the complex at 1.7 billion British pounds $2.66 billion, and was agreed between The Blackstone Group L.P. (NYSE:BX) and a sovereign wealth fund that was not named.
According to the report, which is based on information from two people familiar with the deal, the sovereign wealth fund of Norway is not the buyer, although the Scandinavian country’s wealth fund had been in talks to buy the stake from the company.
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Blackstone Group’s 70% return
Disregarding inflation and exchange rate changes, the deal represents a 70% gross return on the investment The Blackstone Group L.P. (NYSE:BX) made back in September 2009. The company has, according to Bloomberg, begun raising $5 billion for a new fund that will seek to invest in European real estate.
Blackstone bought 50% of the office and retail complex from The British Land Company plc (LON:BLND) (OTCMKTS:BTLCY), which retained the other 50% of the asset. The British Land Co., which originally developed the Broadgate site, is set to hold onto the half of the Broadgate property that it owns.
British Land’s strategy to reduce exposure
Broadgate is one of the most prestigious pieces of land in the world. It is regarded as the single biggest asset in Great Britain, and its sale to The Blackstone Group L.P. (NYSE:BX) in the midst of the financial crisis was seen as a way for The British Land Company plc (LON:BLND) (OTCMKTS:BTLCY) to reduce its exposure to the financial sector.
Recent years have seen the value of the property increase quickly as the financial crisis did not hit the site’s tenants as hard as some had predicted. When the sale was announced earlier this year, The British Land Company plc (LON:BLND) (OTCMKTS:BTLCY) CEO Chris Grigg told Reuters that if he knew how things would go in 2009 he would not have sold the stake in the company, though he reinforced that it was the right decision at the time.