The tallest tower in the City of London, synonymous with the career of Gerald Ronson, is set to be bought by a Chinese insurer.
Anbang Insurance is frontrunner to buy the 755ft Heron Tower, EC2, in a £750m+ deal.
The Beijing firm, which has more than Rmb700bn (£72.9bn) of assets under management, is expected to be formally selected next week.
Anbang is in the lead but other Asian bidders are circling, and it is predicted that bids could go as high as £800m.
The deal would be a symbolic transfer of the trophy asset from the old school – Ronson’s Heron International – to a giant institution that is part of the wave of new money flooding into the capital from the Far East.
Heron Tower comprises 440,000 sq ft of offices as well as two of London’s most upmarket restaurants and bars – Sushi Samba and Duck & Waffle – and the largest private aquarium in the world.
If a deal is agreed, it would set a new record yield for City offices this cycle of just under 3.5%, reflecting both the premium purchasers will pay for iconic buildings and the fact that rents in the building are largely well below current market value.
The first reviews are scheduled to start towards the end of next year.
As a result of the sale, Ronson, one of the country’s best-respected developers, will walk away from the asset that he is most associated with, but not away from business. Despite his age, 76, he continues to work six days a week as executive chairman of his private investment club Ronson Capital Partners, which is developing Riverwalk, SW1, and Chiltern Place, W1, and running his 210-asset petrol station business, Rontec.
He also spends a substantial amount of time on philanthropic endeavours through the Gerald Ronson Foundation.
The purchase would be Anbang’s first in the UK, following its $1.9bn (£1.2bn) acquisition of New York’s Waldorf Astoria hotel from Hilton in February – its first real estate foray outside China.
A sale is not likely to be concluded until October when a covenant of the loan securing the tower expires. Paying off the loan early would incur a significant cost for the building’s owners, which include Heron, the State General Reserve Fund of Oman and Saudi Arabia’s Prince Abdul Aziz bin Fahd.
JP Morgan and Starwood Capital provided a £288m loan in October 2013 as part of a restructuring, which also included a £100m equity injection.
The loans were agreed at a margin of around 450bps – more than 300bps higher than if the building was to be refinanced in today’s competitive debt market.
Eastdil Secured is advising Anbang; Heron is unrepresented.
City rebranding
Developed as the Heron Tower – and still best known by that name – the building underwent a controversial rebranding in 2014 as part of a deal that saw cloud computing company Salesforce lease an additional 50,000 sq ft of office space and acquire the naming rights.
However, the City of London blocked the name change – a decision met with approval by some of the building’s other tenants – and it is now registered officially as 110 Bishopsgate.
