Private equity giant Blackstone is acquiring a 50% stake in British Land's Broadgate holdings. In return Blackstone is assuming £987 mln (EUR 1 bn) of debt on the City of London office estate and a cash payment of £77 mln (EUR 85 mln).

Private equity giant Blackstone is acquiring a 50% stake in British Land's Broadgate holdings. In return Blackstone is assuming £987 mln (EUR 1 bn) of debt on the City of London office estate and a cash payment of £77 mln (EUR 85 mln).

Broadgate was valued at £2.16 bn at end-August 2009 and the contracted rent is about £180 mln per annum. The estate is British Land's largest asset and currently represents 27% of the portfolio. This will fall to 16% after the transaction and the overall City Office weighting will also decline from 31% to 21%.

The £2.13 bn joint venture is with the Blackstone Group real estate funds Blackstone Real Estate Partners Europe III and Blackstone Real Estate Partners VI.

British Land said the strategic objective of the Broadgate jv and a similar agreement in relation to Meadow Hall shopping centre in Sheffield in February with AIM-listed property investor London & Stamford and a partner was to reduce its exposure to large single asset concentrations. The latest deal, British Land said, reduced the property group's loan-to-value ratio to 30% and allowed British Land to 'take maximum advantage of market opportunities as the cycle develops'.

The latest deal, British Land said, reduced the property group's loan-to-value ratio to 30% and allowed British Land to 'take maximum advantage of market opportunities as the cycle develops'.

British Land will be asset manager and administrator for the joint venture company. Broadgate Estates Limited remains a wholly owned subsidiary of British Land and will continue to provide property management facilities and services for the occupiers of Broadgate.

Chris Grigg, CEO of British Land said: 'Reducing exposure to large single assets is the strategy I put in place when I arrived and this deal brings that phase to a close. The transaction increases our capacity for profitable investment opportunities elsewhere as we reinvest in more diversified, liquid assets. We have selected Blackstone as a valued partner with excellent financial strength and real estate capabilities.'