Matrix’s purchase of City of London’s Lloyd’s Building collapses

The sale of the Lloyd’s Building, one of the City of London’s most iconic landmarks, has collapsed more than a month after the property was placed under offer, CoStar News can reveal.

Matrix Property Fund Management, advised by CBRE, went under offer at the end of October to buy the Lord Rogers-designed building from closed-ended fund manager CLI Group, a subsidiary of German bank Commerzbank, for an initial yield of circa 5.5%, writes James Buckley.

It is thought that Matrix, which often arranges deals on a syndicated basis, had been in discussions to buy the Lloyd’s Building in a tie-up with private overseas investors.

CLI Group began entertaining offers via Savills on the 311,200 sq ft trophy asset last September, with a sale price of £290m mooted.

It is understood that the Matrix deal prompted renewed interest among overseas investors, a handful of which are now positioning themselves for a potential purchase now that the Lloyd’s Building is available to buy again.

The property fund management division of investment bank Matrix spun itself out at the beginning of last month after the wider group went into administration. Matrix Property Fund Management, which has around $600m of assets under management, will continue operations as a new standalone business.

Matrix Property Fund Management has arranged, raised or syndicated over £2.5bn of commercial property, compromising some 9m sq ft across more than 80 syndicates and over 200 property transactions on behalf of more than 8,000 investors.

Property purchases are typically structured through unit trusts or off shore limited partnerships with appropriate levels of gearing. Examples include London Stock Exchange listed vehicles, international portfolios, private UK syndicates and tax driven investments.

The Lloyd’s Building, at 1 Lime Street, EC3, is held in Commerz’s closed-end single asset fund CFB-Fonds 154, which is traditionally structured as a long-term investment vehicle with a lifespan until 2016. It was bought from German fund manager Deka for £231m in 2005.

CoStar News revealed in June that CommerzReal had refinanced the debt securing the Lloyd’s Insurance Building with a four-and-a-half-year £131m senior loan provided by DG Hyp and Deutsche Postbank.

The refinancing of the interest-only securitised loan, in the eight-loan European Prime Real Estate No.1 CMBS which was issued by Morgan Stanley, replaced the £141m loan which matured on 20 April.

This reduced the LTV from 61%, with an amortisation schedule to enable DG Hyp and Postbank to fund the £131m senior loan through their pfandbrief pools, providing CLI Group with slightly lower cost of debt than is typical for a City of London office, which is likely to have been an attractive feature of the acquisition for Matrix.

DG Hyp, which withdrew from UK property lending last year, made an exception to its lending restriction, opting to follow a core client in CLI Group in London.

The famous 364,000 sq ft “inside-out” building is entirely let to Lloyd’s of London, for which it was purpose built by architect Richard Rodgers back in 1986, the UK insurance and re-insurance market corporate body, also known as Society of Lloyds.

The Lloyd’s Building was given Grade I listing status in December last year, which gives permanence to a building structure that was designed to be flexible and adaptable — which explains why the lift and stairways are visible on the exterior allowing an uncluttered interior space that could be easily reconfigured.

About CoStar News

Finance Editor, CoStar News
Gallery | This entry was posted in Banks, Lenders, Market Trends, Private equity real estate, Refinancings and tagged , . Bookmark the permalink.

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