Asian family seals £475m London Executive Offices takeover

A portfolio of upmarket serviced offices in London is finally being sold for about £475m to a wealthy Asian family, two years after its owners launched an auction of the business.

Sky News has learnt that London Executive Offices (LEO (Shenzhen: 002131.SZ - news) ), a rival to WeWork and IWG (LSE: IWG.L - news) , is on the verge of striking a deal that will send mixed signals about the prospects for the capital's post-Brexit commercial property market.

Sources said that the takeover by the unnamed family office from southeast Asia was expected to be signed on Friday.

At about £475m, the price tag will fall well short of the £700m valuation attached to LEO when it was put on the market by owner Queensgate Investments in 2016.

A person close to the deal said the shortfall was not the result of deteriorating prospects for premium commercial property in central London, but rather a reflection of the company's "unrealistic" initial price expectations for LEO.

The company competes with the likes of WeWork, which is in discussions about accepting a $10bn (£7.7bn) investment from the Japanese technology investor SoftBank (Swiss: SOFB.SW - news) .

If completed, that investment would come back from SoftBank's Vision Fund, the $92bn (£70.6bn) capital pool that Sky News revealed this week is in talks to inject hundreds of millions of pounds into Acorn Oaknorth Holdings, a UK-based digital lender.

WeWork is now reported to be the biggest office tenant in London, while IWG Group, previously known as Regus (Other OTC: RGSJF - news) , is also a big player in the market.

LEO owns sites in the City, Belgravia and Mayfair, districts which command some of the biggest prices from commercial occupants in the world.

The company's properties include a landmark Victorian building on Cornhill in the City and the former London Patent Office near Chancery Lane.

LEO is the largest five-star serviced office company of scale in the UK, charging premium prices because of the locations it owns and the add-on services it provides.

It says it has more than 3,000 customers ranging from blue-chip multinationals to start-ups.

Its takeover has been struck by advisers at Rothschild, the third set of bankers appointed to market the business since 2016.

Earlier efforts by Lazard (Frankfurt: A0DQP8 - news) and a joint team from Citi and HSBC were abandoned amid lukewarm appetite from prospective investors.

Contrary to some expectations, there has been no sustained fall in London's commercial property sector since the vote to leave the European Union in June 2016.

Since then, a number of trophy real estate assets in London - including buildings nicknamed the Cheesegrater and Walkie-Talkie - have changed hands for higher-than-expected prices.

Last year, The Office Group, a UK-based provider of flexible workspace, was sold to Blackstone (NYSE: BX - news) , the world's biggest property investor, in a £500m deal.

Queensgate is itself backed by a number of private family offices, and is run by Jason Kow, a former head of special situation investments at London & Regional, the real estate giant.

Queensgate declined to comment on Friday.