British Land and GIC sell half of Citadel’s new City tower to Abu Dhabi’s Modon

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British Land and Singapore’s GIC have sold half of Citadel’s new City of London office tower, currently under construction in Broadgate, to Abu Dhabi’s Modon Holdings.

A deal to bring in a new investor at 2 Finsbury Avenue, a one-third pre-let by Ken Griffin. The Citadel And due for completion in 2027, despite concerns about post-Covid demand, it is widely expected to be a sign of growing international investor confidence at the top end of London’s office market.

Modon is an Abu Dhabi-listed real estate group backed by sovereign wealth fund ADQ and International Holding Company, chaired by Sheikh Tahnun bin Zayed Al-Nahyan, one of the most powerful men in the UAE.

British Land chief executive Simon Carter said the deal was a “vote of confidence for both Broadgate and the City”.

British Land, the FTSE 100 UK landlord and GIC will each retain 25 per cent ownership of the tower through their Broadgate joint venture.

An international sovereign-backed investor willing to bet on city office development is a positive sign for the market after two years of brutal recession.

Investment in London offices in the first three quarters of 2024 was the lowest since 2003, according to MSCI, due to lower investor interest in larger blocks. Blackstone bids roughly £300mn for its acquisition “Can of Ham” skyscraper Seen as a positive indicator, however, the deal with vendor Nuveen fell through last year.

Modon chief executive Bill O’Regan said: “The quality and lease potential of 2 Finsbury Avenue, combined with the experience and reputation of our partners, make this an attractive entry for Modon into the London real estate market.”

2 Finsbury Avenue consists of two towers of 21 and 36 storeys, connected by a 12-storey podium. It marks a major expansion of the Broadgate campus in the City of London, which is already home to UBS.

Financial terms of the sale were not disclosed Friday. British Land valued the development at £310mn in September 2024, with £628mn still to be spent before the project is complete.

Ken Griffin’s hedge fund Citadel and its sister firm, market-maker Citadel Securities, agreed last spring to pay 250,000 square feet, marking a two-thirds expansion of Citadel’s London office space. The deal includes an option to increase the lease to half of the building for the US firm.

The transaction represented a record rent for the City of London at the time, British Land said. The landlord later launched a search for a new investor, saying it wanted a partner to “share [the] Project Risks and Costs” and freeing up capital for its other developments.

Many developers have slammed the brakes on new flagship office projects in recent years, as construction and financing costs have risen, office prices have fallen and investors have worried about the impact of working from home on office demand.

These factors result in a limited supply of high-quality buildings coming onto the market, allowing landlords to raise rents.

Carter said he expected “a significant imbalance between demand and supply for new and substantially refurbished space, particularly in the City, leading to strong rent growth at the top end of the market”.

CBRE and Knight Frank advised British Land and GIC. Cushman & Wakefield repped Madon.