Max Property Group has bought St. Katharine Docks from AREA Property Partners and F&C REIT Asset Management for £156.3m in a joint venture with an overseas family trust.
The price, which equates to £330 per sq ft, reflects a 34% increase on the valuation of St. Katharine Docks in February 2010. Based on the latest reported net operating income of the properties, at £9.45m annualised, the purchase price implies a yield of 6.1%.
The subsequent recovery in capital values over the 16 months since the last valuation, together with Leslau’s eye on rental uplift potential, are among the reasons for the price.
Max Property, the real estate investment company set up by Nick Leslau, is planning a refurbishment of the 500,000 sq ft office, restaurant and retail scheme adjacent to Tower Bridge, to improve upon the existing £12.6m annual rent. One of principal office buildings, the 130,000 sq ft Commodity Quay, is expected to fall vacant next year.
Eurohypo is to provide senior debt at 55% LTV – or £86m – upon completion of the purchase, which is expected to close on or before 8 August.
Max will invest 60% of the equity in the joint venture, which is £42.2m, with the family trust, Newmarket Property Holdings, investing the balance, which is £28.1m.
Nick Leslau, chairman of Prestbury Investments, said: “St Katharine Docks is one of London’s jewels, providing a stunning waterside environment, enhanced by the magnificent backdrop of Tower Bridge and the Tower of London. It is difficult to imagine a more beautiful place to work and live in central London and it will be our privilege to enhance the experience of such an important landmark, whilst simultaneously delivering attractive returns for our shareholders.”
The St. Katherine Docks estate secures the St. Katherine Docks loan that is partially securitised in Taurus CMBS (UK) 2006-2 (TAURS 4).
AREA Property Partners and F&C REIT Asset Management sold the complex after the loan defaulted on its LTV covenant in April 2010 and subsequently failed to repay the outstanding balance on the maturity, in July 2010, prompted the St. Katherine Docks loan to fall into special servicing in summer 2010.
Of the £168.7m St. Katherine Docks loan, the £129m A loan is expected to be repaid in full on October’s interest payment date (IPD), while the non-securitised £39.7m B loan “is likely to suffer a principal loss,” according to Christian Aufsatz, European CMBS analyst at Barclays Capital.
CoStar Finance 