Oxford Properties has agreed a partial sale and refinancing of Nomura’s City headquarters at Watermark Place, EC4, in a deal which values the building at around £510m.
German open-ended fund manager Union Investment has placed a 50% stake in the building under offer for around £255m – a 4.5% yield.
Together the new joint owners have also agreed a refinancing of the entire building with Pricoa Mortgage Capital. The senior lender, which is backed by Prudential, is providing a 10-year loan of close to £255m, reflecting a loan-to-value ratio of 50%.
The loan replaces £140m of financing on the property that comes due in May and was put in place at the end of 2010. It was co-arranged by Helaba and Berlin Hyp with Sumitomo also participating.
The sale and refinancing will crystallise a significant profit for Oxford on what was its first UK real estate deal, which at one time seemed highly unlikely.
The company forward-bought its initial 50% stake in the development from UBS in July 2007 at the peak of the previous cycle. The jv then pulled off an improbable deal to lease the entire scheme to Japanese bank Nomura in the aftermath of the financial crisis in 2009.
That deal marked the nadir of the City rental cycle, with the bank agreeing to pay an initial headline rent of £40 per sq ft and securing a six-year rent-free period on its 20-year lease. At the time it was the largest City letting that was not a prelet.
Oxford then bought out UBS’s remaining interest in the building in 2010 for £200m.
The sale of a stake to Union represents a further twist in the history of the development.
German open-ended funds have been significant net sellers in the City in recent years. However, Union, which looked at buying a stake in the building from UBS in 2010, is one of the few that still has substantial capital to invest.
Eastdil Secured is advising on the refinancing; CBRE advised Oxford on the sale; Savills is acting for Union.
