UK: US investment giant Brookfield has exchanged contracts to buy SACO from Oaktree Capital Management for around £430 million.
Brookfield placed the business under offer in October 2017, seeing off interest from including Mapletree and Invesco among others.
This acquisition represents Brookfield’s first foray into the serviced apartment sector, and is comfortably the largest serviced apartment investment deal in the UK to date.
The deal includes all the existing real estate and development pipeline of the SACO business as well as its online operating platform. These include 39 operational assets in the UK and one in Amsterdam, nine of which are freehold, with the remainder leased.
Additionally, there are more than 900 rooms in SACO’s development pipeline that will be owned freehold and branded as Locke aparthotels once they are completed. SACO’s online platform hosts a further 900 apartments across the UK, as well 30,000 units globally.
Eastdil Secured advised Oaktree. JLL and KPMG acted for Brookfield.
Commenting on the deal, Ben Davis, director of Saxbury, said: “There are good reasons for the sector to welcome this transaction. In March 2016, Starwood Capital Group put its Think portfolio on the market. It consisted mainly of London based serviced apartments, and although it was on the market for more than eight months, it did not attract any buyers. Observers were left wondering whether this was a strong indication that the serviced apartment industry was not able to exist as a stand-alone asset class, and was a long way from becoming an investor-friendly market. We are convinced that the serviced apartment asset class is maturing and that it is a mistake to view it as a niche add-on to a more general class of property assets. Over the past few years we have witnessed the growth and strengthening of this sector, and believe there are now many opportunities for increased investment and consolidation.”
“The sale of SACO is a great example of our view coming to fruition and will create a strong, valuable portfolio for Brookfield. This is not just the perfect deal for Brookfield, but it is also the first time we have seen this kind of transaction. To date there has been little comparable data to demonstrate the worth of the industry, which has restricted the flow of investment. The sale of SACO demonstrates an investor-friendly asset class, and its ‘private equity to private equity’ nature shows it can create valuable portfolios and a good return on investment. In our view, the serviced apartment sector should now be viewed as ‘investor friendly’, and has an exciting future ahead,” he added.
