Workspace Property Trust Involved In $969 Million Acquisition
Workspace Property Trust in an investment firm intent on growth. Recently it completed its second major purchase in the property investment space taking its burgeoning portfolio to almost 10 million square feet. The acquisition, of 108 office buildings and just over 26 acres of land, was made from Liberty Property Trust for just a total of $ 969 million.
This acquisition was done in conjunction with Safanad, a Swiss-based investment firm with affiliations to Square Mile Management. It represents a booming trend that is become more and more evident; the rise of working office space.
As more employees work remotely from their devices, office spaces that are designed to accommodate fleeting visits are now becoming evergreen in most developed cities. Indeed, as mentioned previously, companies like WeWork have swept the market share in the last 5 years and are currently valued at $15 billion and they are growing.
Office space, in both the industrial and residential space is now in great demand. In the last 2 years alone, Sydney and Melbourne has seen the total square footage of office space increase within their respective CBD’s by approximately 40%, which is a staggering growth figure.
Whilst these figures might not be as large in their raw growth the US, it is indicative of a global trend. Global being the operative word as this 3-part acquisition of Liberty’s former assets was made by a conglomerate of companies in Geneva, London and Pennsylvania respectively.
Within the last 12-months, Workspace Property Trust has acquired just over $1.2 billion in assets, a clear sign that are well on track to build a strong diversified portfolio that will focus on the residential and commercial office space. The value in these spaces is in the leasing and management contracts which offers reasonable long-term returns, but this is backed up by the value of the property itself as a saleable asset.
Between them, Safanad and Square Mile Management manage almost $15 billion in global property assets which is a good sign for Workspace because of the leverage they can derive from this large collective portfolio as they aggressively seek to expand their asset base. Having such a pool of equity they can springboard from offers them a certain amount of stability.
And aggressive expansion is exactly the mantra driving Workspace’s current business model. As property volatility is subject to many internal (and external) economic factors, the timing is apt as the global markets seek to steady themselves once again. Business recognises the need for office space, but also understands that in order for a business to survive, four walls and a decent internet connection will suffice.
Hardware like printers, servers, large desks and computers are playing less of a role as digital becomes more and more pervasive. The result is larger office spaces are simply no longer required in order for a business to successfully function.
Workspace has hired 50 new staff and reshuffled its internal infrastructure to allow for this rapid expansion. Their vision of becoming a big player in the global investment space is well on track with over a billion in assets purchased in the last year, but more telling than that, is their strategic alliances with London-based Square Mile and Geneva-based Safanad are a likely good bet since their combined portfolio value and diversification of assets gives significant leverage to aid their expansion.
As with any partnership, there’s an inherent risk in pooling resources for the mutual benefit of all parties. In the case of Workspace and Safanad, the general rhetoric has been the usual back-slapping “alignment of vision and strategic plans” for the mutal benefit of all involved.
Liberty, for its part, hasn’t done too shabbily, with just under a billion dollars now in its coffers for this most recent sale, it still has over 100 million square feet of industrial office space within its $9.2 billion-dollar portfolio. This acquisition has evidently worked in their favour as they seek to look after their bottom line whilst continuing to expand and diversify their own portfolio. It seems the price was right.