British Land, the Ftse100 property group, and Blackstone, the private equity giant, are preparing a massive refurbishment of Broadgate, the 32-acre estate they co-own in the heart of the City.
The revamp will secure the future tenancy of anchor occupier UBS, the investment bank that rents 850,000sqft of office space in six of the estate's buildings for nearly £39m a year. There have been fears that UBS might leave the estate, which after a quarter of century looks tired, when the break clauses on several leases come up in 2014.
In an announcement expected this week, Blackstone and British Land will reveal the demolition of two of the UBS buildings, to be replaced by a single £300m development. Most of the bank's major operations will move to this new building, which should be constructed by 2014. The property will not be a skyscraper, in keeping with the relatively low-rise core of the estate.
The move is a mark of Blackstone's huge ambitions for Broadgate, where 30,000 people work. The buyout group acquired a 50 per cent stake in the estate last year, in a deal that valued the estate at £2.1bn and eased British Land's debt burden.
Broadgate made the name of developer Godfrey Bradman, the property tycoon who masterminded what is still arguably the most ambitious scheme in the history of the City. British Land's acquisition of the estate is widely hailed as one of the shrewdest moves in the property industry in the 1990s.
Blackstone has ambitions to further expand its London property portfolio, and is considering whether to make a move on Tower 42, the City's oldest skyscraper. Owners Hermes Real Estate and BlackRock put the skyscraper on the market last month and hope to get more than £300m in the sale.
British Land declined to comment yesterday.