01 Properties pulls off mega Russia office deal

Russian investor 01 Properties has completed the acquisition of the White Square business centre in Moscow for a reported $1 bn (€774 mln). Lender Sberbank CIB provided funding for what has been described as the largest single-asset office deal ever in Russia.

01 Properties purchased the business centre in a corporate transaction from a consortium between developer AIG/Lincoln, Russian investment bank VTB Capital and global private investment firm TPG Holdings.

The deal dates from 2012 but has only now been made public.

The financial details were not disclosed but the parties involved in the deal said it was the largest ever single-asset office deal ever in Russia, which translates to an investment volume around the $1 bn mark, according to reliable sources.

White Square consists of three office buildings comprising approximately 76,000 m2 of rentable area. Completed in 2009, the complex is the first of two phases co-developed by AIG/Lincoln and Coalco, a Russian development company. Coalco sold its holdings in the White Square project to a consortium of major international financial investors led and arranged by VTB Capital and TPG Holdings in May 2011.

International tenants including PricewaterhouseCoopers, Deloitte, McKinsey & Co and Microsoft.

The transaction was prepared by the Sberbank CIB team and was the largest M&A transaction in the Russian real estate market in 2012. The seller consortium was advised by CBRE and Jones Lang LaSalle.

Linklaters LLP and Clifford Chance acted as legal counsel for the seller consortium and O1 Properties, respectively. Herbert Smith acted as legal counsel for Sberbank CIB.

Under the transaction, Sberbank provided financial advisory to O1 Properties and arranged the financing for the deal. At the same time, Sberbank Merchant Banking acquired a 33% stake in the project company in the form of convertible preferred shares.

Tom Devonshire-Griffin, head of capital markets, Jones Lang LaSalle, Russia & CIS, said: ‘The sale of White Square is one of the five largest single asset deals across the globe in 2012 and the largest single asset office deal seen in the Russian market.’

‘The transaction provides clear evidence of investor and lender interest in trophy assets in the Moscow market. The strong domestic and international competition for the purchase demonstrates the liquidity of the market and the possibility of a successful exit for investors from even very large-scale projects.’