Holiday company Center Parcs is set to change hands for £2.4 billion if the rumours are correct about a potential sale to Canadian giant Brookfield. Those “close to the deal” suggest that talks are at an advanced stage and the Canadian company is set to add to its UK exposure. The company has recently acquired office space in London, launched a successful joint bid for Canary Wharf landlord Songbird Estates and announced a £1 billion skyscraper development in London.
The history of Center Parcs is relatively chequered having been in existence for nearly 30 years, changing hands on numerous occasions and being split between property assets and the operating company. Investment giant Blackstone acquired both the operating arm, for £265 million, and the property business, for £825 million, back in 2006.
The Center Parcs business itself posted profits of nearly £150 million last year, attracts more than 2 million visitors per annum with occupancy rates of 97%. There are plans to add to the five UK holiday venues with a site already secured in Ireland. When you bear in mind the price that Blackstone paid for the joint business back in 2006 this would seem like a very impressive return over a nine-year period.
While there is no doubt that Brookfield is obviously interested in the underlying business this is a company which continues to spend enormous amounts of money on UK real estate. Like so many overseas investors the Canadian giant seems to see value where many UK corporate investors fear to tread.
Some commentators question the price
While there is no certainty that the sale of Center Parcs will go through, those close to the transaction seem fairly certain it will, there has been some comments about the £2.4 billion pricetag. There is a suggestion from some observers that the price may be a little on the high side but then again this is a company which has not been afraid to spend big in the UK real estate market. It will be interesting to see as and when the deal is done, what kind of a price has been agreed, and how this will impact similar asset across the country.
Canada boasts an array of prominent property investment companies many of whom are supported by significant pension funds. They have been investing in overseas markets for many years now and the UK, bearing in mind its close proximity to Europe without the risk of the euro, has proven to be a very strong magnet. Whether or not the company will be split again between the operating side and the property site remains to be seen.
Time and time again overseas investors seem to see more value in the UK property market than domestic investors. Canadian outfit Brookfield has been investing heavily across the UK property market aside from the rumoured acquisition of Center Parcs. The company has acquired a mixture of assets including proven landmarks such as Canary Wharf while at the same time announcing plans for a £1 billion skyscraper in the city. Will overseas investors ever grow tired of the UK real estate market?