UK Edition
British offices start-up secure Chinese funding
A British start-up focused on the serviced office industry has secured backing from a giant Chinese firm in a deal that values its two commercial property joint ventures at about £160m.
Office Space in Town (OSIT), which was founded six years ago by brother and sister team Niki and Giles Fuchs, has struck a deal with China’s Kailong that will see the latter invest in its two London-focused property funds, giving them greater firepower to buy more buildings in the capital.
Shanghai-based commercial property business Kailong has taken a majority stake in OSIT’s first fund – LSO I – replacing international investment firm Forum Partners and valuing the vehicle at about £90m. Kailong’s investment in LSO II values the JV at more than £60m. Forum Partners remains a backer of the second vehicle.
OSIT is a provider of boutique, often quirky, serviced offices, including an Alice in Wonderland-themed space in Waterloo.
It buys sites and then transforms them into luxury offices, charging companies rent to use the locations. LSO I already owns three offices in central London and LSO II presently owns a single building, near Monument, in the capital’s financial centre.
Mr Fuchs, who used to own the estate agent Arans, said the investment by Kailong “is a strong endorsement for the strategy and performance of our two serviced office joint ventures”.
He added: “To date, both have generated significant value and returns and the commitment of Kailong and also Forum Partners illustrates serviced offices’ emergence as a separate asset class offering attractive returns for institutional investors.”
The backing from Kailong is a boost for OSIT, which also runs offices in Cardiff, Edinburgh and Northampton, where it is based.
The Chinese company, which was set up 12 years ago, has so far invested more than $1.5bn in 30 different property projects.
Don Tan, of Kailong, described the British start-up as “the perfect partner” for the Chinese company’s further expansion in Britain. He said: “Serviced offices are a very attractive new asset class, underpinned by strong growth drivers in both the UK market and globally and we believe offer excellent investment opportunities.”