Ares Management Corp.’s acquisition of a London building that is now occupied by Netflix demonstrates the alternative investment firm’s ongoing faith in the office market in the UK capital.
The Copyright Building, at 30 Berners Street in Fitzrovia, London, was bought by the Los Angeles-based firm for about £160 million ($216 million), according to Bloomberg.
This purchase price is marginally less than what the previous owner, Union Investment, a German fund manager, paid in 2017. The streaming behemoth Netflix has subleased the entire office space, even though the property is legally leased to Capital Business Services.
Ares is part of a group of alternative asset managers that are now focusing on London properties that were overlooked during the period of distant work brought on by the pandemic. Due to a lack of new development projects, these companies are now betting that rental rates and occupancy rates would rise.
Ares has aggressively purchased properties in London’s upscale West End in recent years, including properties at 101 New Cavendish Street and 45 Pall Mall.
According to Wilson Lamont, partner and co-head of European real estate at Ares, “we think the acquisition of the Copyright Building is consistent with our thesis focused on high-quality, well-located assets benefitting from the powerful rental growth we have seen in many of the Central London sub-markets.” He withheld the purchasing price.
Fitzrovia is located on the edge of the West End business district, which has recently drawn investors. According to Bloomberg, which cited statistics from broker Jones Lang LaSalle Inc., this district saw £5.3 billion in deals last year, more than the £4.2 billion in the City of London.
Jacob Thompson, Union Investment’s senior investment manager for the UK and Ireland, told Bloomberg that now is a good time to make strategic sales to give our European real estate funds more flexibility.
Companies like Elliott Management Corp. and Strategic Value Partners have joined this market in addition to Ares. This area was historically the purview of institutional funds and affluent individuals who were willing to accept modest short-term earnings in return for steady, long-term rental income.
Netflix has dropped its offer to purchase Warner Bros. Discovery’s studio and streaming assets, marking a significant change for the entertainment sector. Skydance’s Paramount may be able to acquire its venerable Hollywood rival as a result of this abrupt departure.
Paramount’s revised plan to buy the entire business at $31 per share exceeded the terms of the current contract with Netflix, the Warner board announced on Thursday. Netflix answered within two hours, refusing to raise its valuation, even though Warner gave it four days to make a counteroffer. The streaming behemoth claimed that because of the high price, the acquisition was “no longer financially attractive.”
In a joint statement, Ted Sarandos and Greg Peters, co-CEOs of Netflix, stated, “We think we would have been good stewards of Warner Bros.’ historic brands.” “However, at the correct price, this transaction was always a nice-to-have rather than a must-have.”
The Hollywood and international media landscapes would be drastically altered by a Paramount-led acquisition of Warner Bros. Discovery. Netflix just wanted Warner’s production studio and streaming service, but Paramount wants to purchase the entire company. This was a significant difference in the bidding war.
Accordingly, well-known properties like HBO Max, the “Harry Potter” series, and even CNN may someday be merged under the same corporate roof as Paramount’s CBS, “Top Gun,” and the streaming service Paramount+.
