Boston Properties Abandons Pursuit Of London Tower

Date : 05/15/2012 @ 12:13PM
Source : Dow Jones News
Stock : Boston Properties, Inc. (BXP)
Quote : 126.6  0.61 (0.48%) @ 4:02PM

Boston Properties Abandons Pursuit Of London Tower

Boston Properties (NYSE:BXP)
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Boston Properties Inc. (BXP) isn't taking London's call.

The office real-estate investment trust has scrapped talks to buy Drapers Gardens, a trophy office building in London's financial district, according to a person familiar with the matter. Boston was in negotiations to buy the 292,500-square-foot building for roughly $450 million from private-equity firm Evans Randall.

A spokeswoman for Boston Properties declined to comment. However, in recent earnings conference calls, President Douglas T. Linde said that, although the company "pursued" some opportunities in London, "the economic requirements and the opportunities didn't get to the point where we were prepared to consummate a transaction."

The deal would have marked Boston Properties' maiden acquisition in London at a time when many foreign buyers have flooded the city. Demand has been strong for London office buildings in part because the market is perceived as ultra-safe. London tenants usually sign long-term leases that aren't subject to rent reductions.

Still, some analysts said they remain wary of companies entering markets with no on-the-ground training or local partners to guide them through unfamiliar terrain.

"I had reservations about it about being a good idea in the first place because I think there is substantial risk in investing overseas," said David Harris, an analyst at Imperial Capital, noting currency risk and complicated tax structures.

"They should probably be spending their dollars here in their established markets rather than planting their flag in the English capitol," he said of Boston Properties.

-By A.D. Pruitt, Dow Jones Newswires; 212-416-2197; angela.pruitt@dowjones.com




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