Commercial Magazine

International Investments: United Kingdom

By Neil Pierson

Board a flight from New York City and you can “hop across the pond” to London in less than eight hours. As long-time allies, the U.S. and the United Kingdom are inextricably linked. The U.S. was the U.K.’s largest trade partner during the year ending in March 2022, accounting for 16.6% of British imports and exports.

It’s noteworthy that the two nations do not have a free-trade agreement. But with the British government now in charge of its own trade policy after the U.K. left the European Union in 2020, there has been a push to change that. A bill was introduced to the U.S. Senate earlier this year that would authorize the president to negotiate a comprehensive trade agreement with the U.K. by 2027.
In relation to commercial real estate investments, British investors have typically been active in the states. According to MSCI Real Assets, the United Kingdom was fifth among the top foreign sources of capital into the U.S. in both 2020 and 2021. More recently, however, the U.K. was the only nation among the top 10 foreign sources of capital (and one of only two in the top 25) to post a year-over-year decline in dollar volume for the 12 months ending in June 2022.
British investors scaled back their activities by 17% during this period, topped only by the 64% pullback by Chinese investors, MSCI reported. But there were a handful of notable deals by U.K. investment companies in the first six months of this year. Each of these transactions, curiously, involved hotels or multifamily housing.
The largest of these deals took place in March when London-based hospitality group Henderson Park shelled out $248 million for the Naples Grande Beach Resort on Florida’s Gulf Coast. The property includes more than 400 luxury rooms and suites along with seven restaurants, 15 tennis courts and an 18-hole golf course.
London and Regional Properties — which owns hotels in cities such as Los Angeles, Las Vegas, Dallas and Miami — expanded its portfolio in February with the acquisition of the 32-story Baltimore Waterfront Marriott for an undisclosed price. The seller, H&S Properties Development Corp., was the reported recipient of a 25-year tax break that expired this year.
A few months later, U.K.-based Cedar Capital Partners joined with Dallas-based Westdale Capital on a $40 million purchase of a boutique hotel in downtown Nashville. The joint venture funded the deal with a $24 million loan from Benefit Street Partners, MSCI reported. Cedar Capital has placed some $4 billion in global hotel properties since 2004. Most of these assets are in Europe, but the company’s U.S. holdings include the Sundance Mountain Resort in Utah that had been previously owned by Robert Redford.
GSA International Ltd., a giant in the student housing sector, made several splashes in the U.S. throughout this year. In February, it acquired a portfolio of four assets totaling 1,450 rooms. These rental properties serve students at the University of Arkansas, the University of Memphis and East Carolina University.
In August, GSA picked up a newly constructed trophy property near the University of Texas at Austin. The 30-story tower, which was rebranded as Yugo Austin Waterloo, has 796 beds and multiple on-site amenities. The seller, LV Collective, reportedly secured a $76.3 million loan for its construction two years earlier.
GSA was far from done. In October, it nabbed five more student housing assets across Texas, Arizona and South Carolina. All of the assets acquired this year will be managed by GSA’s operating partner, Yugo. GSA and the real estate arm of Morgan Stanley have combined to purchase 46 properties in 23 states in the past two years. ●


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