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British Land and Singapore’s GIC have sold half of Citadel’s new City of London office tower, currently under construction at Broadgate, to Abu Dhabi’s Modon Holding.
A deal to bring in a new investor at 2 Finsbury Avenue, which is one-third pre-let to Ken Griffin’s Citadel and due to complete in 2027, has been hotly anticipated as a sign of growing international investor confidence in the top end of London’s office market, despite concerns about post-Covid demand.
Modon is an Abu Dhabi-listed real estate group backed by sovereign wealth fund ADQ and International Holding Company, which is chaired by Sheikh Tahnoon bin Zayed al-Nahyan, one of the United Arab Emirates’ most powerful men.
Simon Carter, chief executive of British Land, said the deal was “a vote of confidence for both Broadgate and the City”.
British Land, the FTSE 100 UK landlord, and GIC will each retain 25 per cent ownership of the tower through their Broadgate joint venture.
The willingness of an international sovereign-backed investor to bet on City office development is a positive sign for the market after a brutal two-year downturn.
Investment in London offices in the first three quarters of 2024 was the lowest since 2003, according to MSCI, with scant investor interest in large blocks. Blackstone’s roughly £300mn bid to acquire the “Can of Ham” skyscraper was seen as a positive indicator, but the deal with seller Nuveen fell through last year.
Modon’s chief executive Bill O’Regan said: “The quality and leasing potential of 2 Finsbury Avenue together with the experience and reputation of our partners, made this a compelling entry for Modon into the London real estate market.”
2 Finsbury Avenue will consist of two towers of 21 and 36 storeys, linked by a 12-storey podium. It marks a major expansion of the Broadgate campus in the City of London, which is already home to UBS.
Financial terms of the sale were not disclosed on Friday. British Land valued the development at £310mn in September 2024, with £628mn of costs still to come before the project is complete.
Ken Griffin’s hedge fund Citadel and its sister firm, market-maker Citadel Securities, agreed to let 250,000 sq ft last spring, marking a two-thirds expansion of Citadel’s London office space. The deal includes an option for the US firm to increase its lease to half of the building.
The transaction represented a record rent for the City of London at the time, British Land said. The landlord later launched a search for a new investor, saying it wanted a partner to “share [the] risk and cost” of the project and free up capital for its other developments.
Many developers slammed the brakes on new flagship office projects in recent years, as construction and financing costs rose, office values faltered and investors worried about the impact of homeworking on office demand.
Those factors have resulted in a limited supply of top-quality buildings coming to market, allowing landlords to boost rents.
Carter said he expected a “significant imbalance between demand and supply for new and substantially refurbished space, particularly in the City, leading to strong rental growth at the top end of the market”.
CBRE and Knight Frank advised British Land and GIC. Cushman & Wakefield represented Modon.
