Consortium to buy Lloyds Chambers - The purchaser was advised by Gryphon Property Partners

26th July 2013

Contracts have been exchanged to buy the property for £64.5m following a comprehensive sales process.

A note to the Irish Stock Exchange this afternoon said: "On 23 July 2013 fixed charge receivers from Ernt & young LLP were appointed over the Lloyds Chambers Property by Credit Suisse, acting by the special servicer. On July 24 2013 contracts were exchanged with a purchaser on the Lloyds Chambers Property collaterising the Lloyds Chambers and Crystal Court Loan.

"The net proceeds of the sale are not anticipated to be sufficient to repay the Lloyds chambers and Crystal Court loan in full. Completion of the sale of the Lloyds Chambers property is scheduled to occur on the payment date falling in October 2013."

The news comes after Westbrook Partners put the property under offer earlier this year, before negotiations over the sale fell away in May over pricing issues.

CoStar News revealed in January that Lloyds Chambers had come back to market for £76.7m with potential for conversion into a major residential scheme.

CBRE and Savills were appointed to sell the 193,450 sq ft office building at 1 Portsoken Street, E1, reflecting a net initial yield of 8.75% and a capital value of £396 per sq ft.

Stephen Pearson, Senior Director, Central London Capital Markets, CBRE said: “The sale of Lloyds Chambers to yet another China-backed new entrant to the market, continues the trend of a wide range of Asian capital currently focussed on the London property market.

"It further demonstrates the willingness of Chinese capital to be opportunistic in identifying investments in London as well as focusing on prime assets.”

A team comprising CBRE, PLP Architects, Gordon Ingram Associates and Miller Hare have undertaken preliminary development feasibility studies which support the potential for the site to support a substantial residential scheme of a minimum 222 residential units, which in principle has the support of the City of London’s planning department.

Alternatively, there is scope to carry out a major office refurbishment with the potential to increase the net internal floor area by 65,000 sq ft.

The 1983-built Lloyd’s Chambers is leased until 23 June 2018 to Aon at a passing rent of £7.1m per annum, equating to £36.61 per sq ft overall with no break clauses.

The site has considerable redevelopment and change of use potential in the short to medium term. Aon is not in occupation of the whole and there is an opportunity to negotiate an early surrender with Aon, which would consider disposing of its lease and dilapidations liability.

Aon, which is relocating its global headquarters and is consolidating its London presence to British Land and Oxford Properties’ Leadenhall building from the second half of 2014, sublet its space to Hermes Pensions Management when the insurance company relocated to Devonshire Square.

It is the second time in less than two years that Lloyds Chambers has been attempted to be offloaded. The building was previously brought to market in May 2011 for £94m, reflecting a 7.4% yield, by former loan servicer, Capita Asset Services and Gresham Down in the knowledge that the estate of Rocca was unable to repay the then total £89.2m outstanding securitised balance at maturity.

The loan transferred into special servicing in autumn 2011 and was subsequently taken off the market when the Cornerstone Titan 2006 CMBS loan was transferred from Capita Asset Services to CBRELS.

During 2012, CBRELS has worked through a series of potential alternative uses to revive life in the 30-year old asset.

Rocca bought Lloyds Chambers in 2006 for £104m from Robert and Vincent Tchenguiz’s Consensus Business Group, financed by a £110.3m Credit Suisse senior loan, which was securitised that July, and a £12m junior loan.

The outstanding balance at the 23 July 2013 interest payment date was £71.3m for the senior debt and £11.8m for the junior debt.

CBRE and Savills represented the vendor. The purchaser was advised by Gryphon Property Partners.

 

Source: James Buckley, CoStar News