The United Kingdom has several major players in global commercial real estate. But in recent years, British companies have increasingly looked to Asia, or have stockpiled assets in Great Britain and elsewhere in Europe.
According to Real Capital Analytics (RCA), which tracks property sales of assets valued at $2.5 million or more, British investments in the U.S. ranked below European neighbors Germany, Switzerland and Spain last year. The U.K. hasn’t ranked in the top 10 among foreign investors in the U.S. since 2017. And no British-based company made RCA’s 2019 list of the top 20 individual investors in U.S. assets.
In 2019, U.K. companies were partial investors in a total of $1.5 billion in sales across 45 U.S. properties, ranking Britain No. 11 in terms of investment volume, RCA reported. Despite that, the U.K.’s ranking edged up from No. 12 in 2018. Britain’s overall investment in the U.S. rose 11% compared to 2018. In 2017, the U.K. ranked No. 8.
One likely factor influencing British investment over the past two years is the uncertainty caused by Brexit, Britain’s divorce from the European Union. Many analysts believe that Brexit will ultimately hurt the commercial real estate market in Britain and may indirectly spark more investment into the U.S.
It is difficult, however, to tell where the trend is headed. The COVID-19 pandemic has changed the global investment outlook, so it is unclear what the level of British investment will be in 2020.
Although many of the big players in Britain stayed away from the U.S. last year, there were some exceptions. The largest single deal by volume involved London-based Cain International, which partnered with Alagem Capital Group to buy an eight-acre development site on Wilshire Boulevard in Beverly Hills, California, for a reported $420 million.
One of the largest hotel acquisition deals in the U.S. by dollar volume involved the U.K.-based Queensgate Investments. In October 2019, the company announced it was buying Freehand Hotels, a lifestyle-hotel brand owner and operator, for $400 million from a seller consortium. Freehand owned hotels in New York, South Florida, Los Angeles and Chicago.
Another British player last year was the investment company AGC Equity Partners, which has been buying up data centers in the U.S. in partnership with an American investor, Next Tier HD. In March 2019, the London-based AGC completed a $70 million deal for a data center in Kings Mountain, North Carolina, which has been leased by Boeing.
Also in March 2019, the London-based co-living company The Collective bought the Paper Factory Hotel in Queens, New York. The price was $58 million, according to RCA. In August of last year, REM Finance purchased a 47,000-square-foot office building in Los Angeles, leased to Snap, for $51.8 million.
The equity group London & Regional was a partner with the Vella Group in buying a 200,000-square-foot office complex in the Los Angeles metro area for $50.8 million. One other British company made a splash as a seller in 2019. In May of last year, the U.K.-based Cineworld struck a deal to sell off 17 U.S. cinemas and then lease them back. RCA reported that the company sold 36 properties over the course of 2019. Cineworld owns the U.S. chain Regal Entertainment.