Queensgate finalises acquisition of Morgan Stanley's serviced offices

Queensgate Investments has completed the acquisition of a five-star central London serviced office business from Morgan Stanley Real Estate Fund V.

The investment volume for the acquisition of the Executive Office Group (including costs) is believed to be more than £260 mln (€309 mln).

Executive Offices Group (EOG) controls 28 high-quality serviced offices, totalling 48,000 m2 located in Mayfair, Belgravia and the City of London. The portfolio includes 33 St James’s Square, SW1; 78-79 Pall Mall, SW1 and Central Court, WC2.

EOG's revenues have grown by 10% per annum since 2010 and currently stand at around £45 mln. Revenues are strongly correlated with central London office rents, which according to estimates by major property services firms are expected to grow at a minimum of 5% per annum for the next five years.

The portfolio’s current occupancy rate is around 88% and the average tenant term is more than 32 months, both well above the London serviced office average. The group has around 3,000 customers and more than 160 employees.

Morgan Stanley Real Estate Fund V had owned EOG since 2005.

Queensgate Investments, a private equity real estate fund manager set up by Jason Kow and LJ Group, carried out the acquisition through its Queensgate Investments Fund I. The fund won a competitive tender, which included sovereign wealth funds, marquee hedge funds and private equity companies.

Funds advised by Cheyne Capital and DRC Capital respectively provided financing of around £170 mln for the acquisition.

Queensgate Investments Fund I was advised by Brown Rudnick, SJ Berwin, KPMG and Ereira Mendoza.