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Developer Sells Office Element Of £1B Scheme To Refinance Debt


The developer behind a £1B west London luxury scheme is selling the office element of the project in an attempt to facilitate a major refinancing. 

Northacre has appointed Michael Elliott and Eastdil Secured to sell 3 & 4 Orchard Place for about £165M, React News reported. The 115K SF of offices and 20K SF of retail being sold are part of the Broadway, the redevelopment of the former Metropolitan Police headquarters, which sits on 1.72 acres. 

Bisnow revealed last month that another luxury residential scheme being developed by Northacre had gone into administration. 

The offices being sold are about 50% leased at rents of about £69 per SF, React reported. The scheme includes 258 luxury apartments across 355K SF attached to 16K SF of health and wellness space. 

The apartments are spread across six towers, with offices and retail at the base of two of them. A sale at the guide price would reflect a yield of 5.5%.

Northacre is owned by SHUAA Capital, which merged with Northacre’s prior owner, Abu Dhabi Financial Group, in 2019. 

The offices are being sold to help with the refinancing of a £700M debt secured against the scheme with a new £660M loan needed before the summer, per React. 

ADFG bought the Broadway for £370M in 2016, and the project completed in August 2022. In 2017, First Abu Dhabi Bank provided a £700M debt facility, split between a £240M acquisition facility and a £460M development facility, according to the accounts of the special-purpose vehicle that owns the scheme. 

The accounts for 2018, the last year that is publicly available, showed that £416M of that had been drawn down. The loan was scheduled to mature in March 2022. The loans have an interest rate of Libor plus 3.25% and 3.5%, respectively.

An additional £100M of bonds owned by the project's backers is also outstanding. 

About 65K SF of the project's residential units have been sold, React reported, with sales affected by construction delays and the pandemic. Talks with alternative lenders are ongoing.

Savills put a gross development value of £1.2B on the scheme in 2018, while the company’s directors put a value of £1.4B on it. 

According to documents filed at Companies House, the ultimate beneficial owners of the company that owns the scheme are Hazza Zayed Sultan, younger brother of United Arab Emirates President Mohamed bin Zayed Al Nahyan, and Abdulhamid Mohammed Saeed Al Ahmadi, a former governor of the Central Bank of the UAE. Both own more than 25% of the company’s shares.

First Abu Dhabi Bank is also the lender behind the 1 Palace Street development, which in May saw administrators appointed to the SPV that owns it. The development comprises 72 luxury apartments, a restaurant and a health centre. It has frontages on Buckingham Gate and Palace Street, and some of the apartments have views into the gardens of Buckingham Palace

At the end of 2019, Palace Revive had £353M of debt: acquisition and development facilities of £288M owed to First Abu Dhabi Bank and £65M in bonds listed on The International Stock Exchange, which had been bought by parties related to the company’s owners.

The loans from First Abu Dhabi Bank were scheduled to mature in December 2020, but they were extended to December 2021, the accounts said. The interest rate on different parts of the loan ranged from Libor plus 3.25% to Libor plus 4.5%.