Almacantar, the property investment management firm founded by Mike Hussey, is to buy the Midtwon’s CAA House and 1 Kemble Street from Tishman Speyer off-market for around £109m.
CAA House and 1 Kemble Street, was bought by Tishman Speyer for £140m in 2006. Tishman then securitised the debt the following year in Lehman Brothers’ £707.76m Windermere XI CMBS, with the loan maturing on January 15.
CoStar News first indicated these properties would come to market back on January 6, as part of a raft of £200m-worth of UK secondary assets up for sale prompted by maturing UK CMBS loans.
The sale of the inter-connected offices will repay the outstanding £93m securitised debt , but the whole loan LTV was above 100%, suggesting there could be losses among the junior debt investors when bondholders are repaid at the next interest payment date (IPD).
Hussey’s Almacantar was able to acquire the asset off-market ahead of the properties formal marketing, and is thought to eye a number asset management opportunities for the property.
CAA House is let to the Civil Aviation Authority until 2019.
Prior to the maturity of the Lehman securitised debt, Fitch Ratings warned “refinancing will prove challenging” given that the Fitch whole loan LTV of above 100%.
CAA House and 1 Kemble Street are two large inter-connected office buildings, with a total net internal floor area of 229,164 sq ft, located on the western side of Kingsway. They are both held freehold and are leased to the Civil Aviation Authority until December 2019 at £6.2m per annum, reflecting an average rent of £27.11 per sq ft.
Mike Hussey, chief executive, Almacantar, said: “We are delighted to have acquired CAA House and 1 Kemble Street. The properties are a good fit for our portfolio extending the timeline for our value-add activities to 2020. It is a location that we expect to perform strongly given its proximity to Covent Garden and the restricted supply of office space in the West End.”
Julian Stocks, managing director, Tishman Speyer, said: “We are very pleased to have sold this asset to Almacantar. The funds released will be put to work on our exciting development projects which are underway in Paris and Frankfurt.”