St Martins completes £1.7bn More London buy

Kuwaiti property company St Martins has exchanged contracts to buy the sprawling 13-acre More London estate for around £1.7bn, CoStar News can reveal, in one of the largest-ever UK commercial property deals.

Screen shot 2013-12-07 at 14.51.10Following weeks of negotiations which have seen owner London Bridge Holdings explore refinancing options as well as a potential sale, St Martins yesterday exchanged on the deal, writes James Buckley.

In October it emerged that St Martins had made a bid for the 2.1m sq ft More London estate and has since been in negotiations over the deal with London Bridge Holdings, a Bahamas-based company controlled by a group of investors led by Dikran Izmirlian, an Armenian businessman who amassed a fortune through investments in soft commodities.

CoStar News story prompted the following official statement from London Bridge Holdings: “London Bridge Holdings originally had commenced a process to refinance More London by the early summer of 2014 but, when presented with a highly attractive offer which maximizes the value of its ownership of More London, London Bridge Holdings determined to capitalise on this opportunity.

“Terms of the transaction, including price and the identity of the purchaser, were not disclosed.”

While London Bridge Holdings declined to comment on the price, CoStar News’ sources suggest that More London sold for £1.7bn.

The sale price completed a huge turnaround for the More London portfolio, with the portion of More London which formed the security for the existing RBS More London CMBS having rallied in value by just over 20% to March 2013, according to a CBRE valuation.

London Bridge Holdings’ statement continued: “This transaction underscores the success of London Bridge Holdings in transforming a blighted, brown field site into a vibrant and vital global business center.

“More London today is a magnificent development of properties, home to world class tenants from both the private and public sectors. It is an important symbol of London’s position as an international business centre with morning, lunchtime and early evening footfall traffic at levels comparable to Bond Street.

“Our team of professionals has executed magnificently throughout our ownership of this unique real estate asset and with the value of More London now unlocked to us, we are well positioned to move forward to bring our “More” brand to other attractive locations globally.”

Screen shot 2013-12-07 at 15.02.56The More London complex by London Bridge includes the City Hall headquarters of the Mayor of London, Boris Johnson, as well as office properties let to the likes of EY, PwC, Terra Firma Capital Partners and law firm Lawrence Graham.

Nearby, St Martins already owns the Hays Galleria and Cottons Centre, as well as The Willis Building in the City, Wren House, Adelaide House, 150 Cheapside, 1 Bunhill Row, 2 Gresham Street, 60 Threadneedle Street, and 5 Canada Square in Canary Wharf.

Nabarro and Savills are advising St Martins; Capital Real Estate Partners and Rothschild have been advising on the sale.London Bridge Holdings acquired in 1998 the brown field site which it developed into More London.

Deutsche Bank and JP Morgan were shortlisted to refinance More London prior to the refinancing track being placed on hold, with a final decision never made.

Rothschild was appointed as adviser to London Bridge Holdings for the potential refinancing which would have sought to replace an the outstanding £735.2m whole loan, which matures next July.

A select group of banks were invited to pitch for the mandate which comprised around £900m in senior debt and a up to a further £300m mezzanine loan.

Deutsche Bank and JPMorgan were expected to have sought an exit the senior circa £900m loan through a CMBS, which would have been the largest post-crisis UK securitisation.

Goldman Sachs and HSBC also pitched on the financing mandate but, but Deutsche and JPM were understood to have offered the most competitive loan pricing.

Unsolicited financing offers from pfandbrief banks were also received by Rothschild seeking to undercut Deutsche Bank’s offer.

The cash purchase by St Martin’s is now expected to trigger the repayment of the £639.81m EPIC (More London) CMBS to noteholders in January and the repayment of the £95.36m junior loan to RBS.

Additional reporting by James Wallace. 

jbuckley@costar.co.uk and jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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