Crosstree Real Estate Partners has completed its acquisition of London-focused high-end serviced office business Argyll from Alpine Grove Partners and The Baupost Group for around £330 million.
Argyll operates 25 assets in London, including a mix of listed buildings and modern office buildings. Ten assets within the portfolio are owned outright by the business, primarily located in the West End and City core, including the Grade II-listed 33 St James’s Square.
The business said it has been stabilised over the last five years under the leadership of chief executive, John Drover, and is well positioned for future growth through planned refurbishments within the existing portfolio as well as new site acquisitions.
Nick Lyle, founding partner at Crosstree, said in a statement: “We are excited to acquire a market-leading platform underpinned by best-in-class prime assets with a proven ability to operate through a number of office market cycles. We look forward to working with the experienced management team to grow the business against the backdrop of a Central London prime office market that has recovered strongly since the end of the pandemic. We expect continued strong momentum for prime offices driven by further “flight to quality” by occupiers and limited new supply.”
The sale includes 1 Cornhill, the former Royal Insurance building opposite the Bank of England, 85 Gresham Street, 33 St James’s Square, and 78-79 Pall Mall.
Argyll, which has operated in London for decades under different names, was bought by Alpine Grove and Baupost via a restructuring process in 2021. Alpine Grove had been a previous owner of the business and it has subsequently reorganised operations, restructured leases and refurbished some of the buildings.
London Executive Offices was bought by Celvam from Queensgate for £475 million in 2017, and relaunched as The Argyll Club in 2018 announcing a £10 million-plus investment in its then-portfolio of 38 buildings.
The group is unusual in the serviced office space in that it has favoured freehold acquisitions rather than leasehold, although it now operates more buildings under leases. It has also introduced business memberships for its clubs across London.
The group was set up by well-known real estate entrepreneurs Peter Kershaw and Peter Allport. The freehold ownership of much of the portfolio enabling the duo to secure one of the first notable institutional buys of a serviced office business when Morgan Stanley bought it in 2005 for £220 million.
Queensgate Investments, a joint venture between the Kow Family, the LJ Partnership and the Peterson Group, acquired LEO, on behalf of Queensgate Investments Fund I, for approximately £260 million from Morgan Stanley Real Estate Fund V in September 2013. The acquisition was financed by a four-year £170 million whole loan extended by DRC Capital and Cheyne Capital.
Celvam bought the LEO business in its entirety, as well as its 260 team members, LEO said in a statement at the time of the original sale. The reported sale price was almost one-third below the original reported £700 million asking price when the brand was put up for sale in 2016.
Crosstree was advised by JLL, and Alpine and Baupost were advised by Eastdil Secured and Evercore.