Serviced office giant Regus has swooped to buy Basepoint Business
Centres as it looks to consolidate its position as the biggest player in the
burgeoning sector amid fierce competition from new entrants.
Under the deal, which is thought to have been struck at a price of
up to £100m, Regus will acquire 31 Basepoint centres, totalling around 1m sq ft
in space, and increase its portfolio to more than 340 centres - more than three
times the number operated by any other provider.
The acquisition marks Regus’s latest attempt to increase its
dominance in the serviced office market, having bought
Avanta last year and having previously acquired BusinesSuites
The deal will bolster its balance sheet as all the Basepoint
centres are freehold and fits with its long-term strategy to increase the
proportion of freehold assets in its portfolio relative to leasehold. Most of
the Basepoint centres are located in the South East, with the most profitable
centres being a mix of offices and light industrial.
Regus has had to adapt its model in recent years to compete in the
rapidly evolving sector.
The emergence of
WeWork and other co-working and flexible workspace providers
has forced Regus to diversify its offer with co-working and virtual office
services. The company has also accelerated its expansion programme in the UK in
recent months, opening new centres in Aylesbury, Birmingham, Lewisham and Teddington.
Earlier this month, Regus, whose
holding company IWG is listed in London, revealed a 4% dip in
pre-tax profits in the first half of the year to £80.8m, which it put down to
increased investment to grow its network.
Industry experts said they expected further M&A activity in
the sector over the next few months. “Notwithstanding the Brexit door is now open, there are clear
signs that the consolidation in the sector will continue - especially in the
core markets, including London - and do not be surprised to see a few new
players in the market, including landlords offering quasi-flexible/managed
space,” said Douglas Green, co-founder of GKRE, a specialist flexible workspace
Smaller independent operators could be sold to larger rivals or
investors and some of the bigger operators could even be taken over, he said,
acquisition of The Office Group earlier this year.
One outfit currently up for sale is the upmarket operator
London Executive Offices (LEO), which is being marketed through
Citibank and HSBC by owner Queensgate Investments with a price tag of £700m.