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New York investor to buy Lloyds Chambers

By James Buckley - Tuesday, November 07, 2017 16:08

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New York-based Alfred Equities, headed by private investor Abraham Schwartz, has exchanged contracts to buy Lloyds Chambers in the City of London for circa £100m.

Alfred Equities, which has agreed a net initial yield of around 7%, has opted not carry out the SPPARC Architecture-designed ‘Butterfly’ scheme, in favour of a refurbishment of the existing building.

The deal comes after the joint venture that owns Lloyds Chambers – a partnership between USA Treasury Secretary John Snow, Chinese investor Fosun Property Holdings, a trust of Judith Ryan, and James Lapushner, the former head of the Morgan Stanley Real Estate's investing business in Germany and the founder of Anacott Capital – rejected a series of knockout bids for the building from the likes of student housing developer Unite - representing a £35m premium to the October 2013 purchase price.

Unite is understood to have lodged a pre-planning application with City planners to convert the building at 1 Portsoken Street into 160,000 sq ft of student accommodation and a further 240,000 sq ft of offices. It bid just over £95m.

In 2014, Aeriance Investments, a European commercial real estate lending specialist, alongside a joint venture partner, had agreed terms to buy the building for just under £100m. The deal went under offer with backing from Aviva Commercial Finance, which provided the £42m senior loan for the JV owners’ original acquisition, and was prepared to transfer the loan to the new owners.

Separately, Hermes, which is Lloyds Chambers’ main occupier, agreed terms earlier this year to move to around 46,000 sq ft at 150 Cheapside ahead of its lease break in June 2018. Hermes is taking the space on a sublease from AIG at a rent of £58.33 per sq ft. AIG's lease expires in October 2025 and the group pays a passing rent of £2.7m per annum.

The leases on Lloyds Chambers expire in 2018 and the building produces an annual income of £7.1m.

Last summer, the City of London Corporation awarded planning consent to proposals to redevelop Lloyds Chambers into a 400,000 sq ft office and retail scheme dubbed ‘The Butterfly’.

The Butterfly – so named because of the SPPARC Architecture-designed ‘butterfly’ shape - would have more than doubled the size of the existing 193,450 sq ft Lloyds Chambers office building, E1, whilst maintaining the general height of the incumbent block.

The JV completed its purchase of Lloyds Chambers in 2013 for £64.5m amid perception in the wider market that it had overpaid for the asset.

The acquisition of Lloyds Chambers marked Fosun Property Holdings’, a wholly owned subsidiary of Fosun International, first foray into UK commercial property.  

Fosun International is the largest privately owned company in mainland China and is headquarted in Shanghai but incorporated in Hong Kong. The firm’s businesses cover industrial operations, investment, asset management, and insurance.

John Snow, who served as the 73rd United States Secretary of the Treasury under former president George W. Bush, joined Fosun International in 2010 as an adviser to its board of directors.

The asset management vehicle in control of Lloyds Chambers is run by James Lapushner and chairman of Silverfin Development, Mike Ryan.

Gryphon Property Partners advised the vendors; Harris Associates and Noble Harris represented the purchaser.

jbuckley@costar.co.uk

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