A consortium comprising developer AIG/Lincoln, Russian investment bank VTB Capital and global private investment firm TPG Holdings and the investment company O1 Properties have completed an investment transaction involving White Square, a class A office centre in Moscow. The seller consortium was advised by Jones Lang LaSalle and CBRE. The acquisition and its financing was arranged by O1 Properties with Sberbank CIB.
A consortium between leading developer AIG/Lincoln, leading Russian investment bank VTB Capital and global private investment firm TPG Holdings (sellers) and the investment company O1 Properties, one of the largest owners and managers of a portfolio of high quality office properties in Moscow (purchaser), announce the completion of an investment transaction involving White Square, a class A office centre in Moscow. It was the largest single asset office real estate investment transaction ever completed in the Russian market.
The seller consortium was advised by Jones Lang LaSalle and CBRE. The acquisition and its financing was arranged by O1 Properties with Sberbank CIB.
Linklaters LLP and Clifford Chance acted as legal counsel for the seller consortium and O1 Properties, respectively. Herbert Smith acted as legal counsel for Sberbank CIB.
The deal has been approved by the Federal Antimonopoly Service of the Russian Federation.
White Square Office Center consists of three office buildings comprising approximately 76,000 sq m of rentable area. Completed in 2009, the complex is the first of two phases co-developed by AIG/Lincoln and Coalco, a Russian development company. Coalco sold its holdings in the White Square project to a consortium of major international financial investors led and arranged by VTB Capital and TPG Holdings in May 2011.
White Square is widely recognized as Russia’s premier office development and occupies a commanding site in Moscow’s Central Business District with outstanding prominence at Belorusskaya Square and the Church of St. Nicolas. It has received critical acclaim, winning the Commercial Real Estate Moscow “Class A Office Center” award and earning developers AIG/Lincoln and Coalco the “Developers of the Year” accolade in 2010. The architects for White Square, ABD and APA Wojciechowski, also won the award, “Architects of the Year” for their work on White Square in 2010.
The prestigious complex has attracted significant occupier interest and is leased to major international tenants including PricewaterhouseCoopers, Deloitte, McKinsey & Co and Microsoft. White Square boasts eight restaurants and cafes on its ground floor, including Torro Grill, an Argentine steak house, and Coffeemania, a popular city café. The pedestrian pathways, central fountain and outdoor dining terraces have made White Square a landmark meeting place and entertainment destination.
Dmitry Mints, Chairman of O1 Properties, commented: “The acquisition of White Square marked a successful closure of a big year (2012) for our Company and an important milestone in the further development of O1 Properties. This property will take its justified place among other trophy assets in our portfolio and raise its Gross Asset Value to almost $4 billion”.
Tim Demchenko, Global Head of Private Equity and Special Situations at VTB Capital, noted: “White Square is probably the best office asset in Moscow and in Russia generally. It is a good example of best international practices in commercial real estate, brought to Russia by AIG/Lincoln. This investment highlights the real estate investment track record of the private equity team of VTB Capital, which started with the acquisition and subsequent sale of Lesnaya Plaza. Investing in prime standing commercial real estate assets in Moscow remains one of our core strategies in the real estate sector.”
Brian Patterson, Managing Partner, AIG/Lincoln Europe, commented: “White Square is an example of successful collaboration between Russian and international partners. White Square would never have been possible without the vision, commitment, investment and expertise of our strong Russian partners, Coalco, led by Vasili Anisimov, and VTB Capital, led by Tim Demchenko.”
Stephen Peel, Managing Partner of TPG Holdings, commented: “We are very pleased with the progress of this investment which is a continuation of TPG’s active investment program in Russia and another example of our successful partnership with VTB Capital.”
Alexander Bazarov, Member of the Management Board, Senior Vice President of Sberbank of Russia and Co-head of Sberbank CIB, remarked: “This was one of the landmark transactions in the real estate market in 2012. And we’re happy to have been able to offer a comprehensive solution for financing O1 Properties’ acquisition of White Square, among the most sought-after office real estate in Moscow. We would like to thank O1 Properties and the consortium of sellers for their close cooperation at all stages of the deal.”
Tom Devonshire-Griffin, Head of Capital Markets, Jones Lang LaSalle, Russia & CIS, said: “We were delighted to represent AIG/Lincoln and VTB Capital on this transaction. The sale of White Square is one of the five largest single asset deals across the globe in 2012 and the largest single asset office deal seen in the Russian market. The transaction provides clear evidence of investor and lender interest in trophy assets in the Moscow market. The strong domestic and international competition for the purchase demonstrates the liquidity of the market and the possibility of a successful exit for investors from even very large-scale projects.”
Justin Berry, Senior Director, Capital Markets, CBRE, added: “White Square has achieved major critical acclaim and commercial success since it opened in 2009. This transaction, the largest single asset office sale in Russia ever, demonstrates the project’s ongoing investor appeal as well as underscores the significant fundamentals of the building and wider prospects for the super prime office market in Moscow. The landmark sale also reconfirms AIG/Lincoln’s status as a leading developer in Central and Eastern Europe.”