Corporate Finance

Blackstone Buys The Office Group for $640 million

Buyout fund Blackstone, the private equity giant, announced on July 19th the purchase of a controlling stake in a UK flexible workspaces and co-working group - The Office Group.

Buyout fund Blackstone, the private equity giant, announced on July 19th the purchase of a controlling stake in a UK flexible workspaces and co-working group - The Office Group.


"The traditional workspace is being redefined in gateway cities across the globe, as evolving business practices increase demand for flexible office space," said Anthony Myers, Blackstone's head of European real estate.

 

Launched in 2003 by Olly Olsen and Charlie Green, the Office Group (TOG), competes in the UK with companies such as Regus and Second Home, providing workspace in 36 buildings, mainly across central London, and has a growing client base of more than 15,000 members. Clients include AOL, Dropbox, Pinterest, British Gas and Santander. The company has been performing strongly, according to the website All work. Its financial results for 2015 reported its EBITDA up 33% to £15.4m (2014: £11.6m), and revenues up 62% to £54.3m (2014: £33.6m). TOG is now London’s largest privately-owned occupier of office space.

 

The sharing office space market is still growing. In another huge deal, WeWork, the US-based shared workspace provider, secured a reported $3bn investment from SoftBank, and is now valued at more than $17bn. It also comes less than a month after Blackstone sold Logicor, a European owner of industrial warehouses, to China Investment Corporation (CIC.UL) for €12.25bn.

 

What’s more, the timing of the deal, which comes at a time of conflicting signals on Brexit, will be interpreted as a vote of confidence by global investors for the commercial property prospects of the UK, although the longer-term outlook for UK commercial property remains unclear. According to a report by Rathbones, there has been increased interest in property investment because of the inflation protection of real assets like property in the outlook for higher inflation environment. Meanwhile, the weakness of sterling makes UK assets more appealing to international investors.

 

 

J.N.S.J

 

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