A Walking Tour Of London's £500M Office Buildings Frozen By Sanctions
In the City of London, 10 Fenchurch Street is the sort of nondescript office building you walk past without looking twice, its façade grubby, no lights showing in the windows.
But its story comes with intrigue. The 78K SF office building is the latest to be subject to an asset freezing order from the UK government after its owner was hit by sanctions.
That means it cannot be sold and must get special permission to collect rent.
Commercial buildings in the City once valued at well above £500M have been subject to asset freezes over the past 15 years due to the actions of their landlords, be they individuals or governments.
Another £100M in properties are owned by someone on the UK sanction list due to family ties to the leader of Belarus but are not currently under freeze orders.
On a grey, rainy December day, the sort that reminds you why tourists make jokes about London weather, Bisnow toured some of the major office buildings that are frozen, and those with a sanctioned owner, to find out what happens when a commercial property is hit by such an order.
Britain, infamous for its history of stealing wealth and assets from around the world, remains adept at offering refuge to those who still do so. That often comes in the form of money laundering via commercial property.
An asset freeze on a commercial building is more complex than one that involves intangible financial assets like shares or bonds. A building is a physical asset that requires maintenance, and its value derives entirely from rent paid by tenants.
It is the landlord entity that is subject to an asset freeze, which is put in place by the UK Treasury, Lucy Thomas, a Hogan Lovells senior associate for real estate disputes, told Bisnow.
The freeze is indefinite, lasting as long as the sanctions do. A building owned by a landlord subject to an asset freeze cannot be sold by that landlord. In theory, the government could sell a seized property, but that would open up legal challenges.
That means it is common for frozen assets to sit in limbo for decades.
If the sanctioned landlord wants to collect income or spend money on a building, they must apply to the Office for Financial Sanctions Implementation for a license.
They might receive this license if they meet a basics needs test, proving that the money being received or spent is used to maintain the value of the building or keep the landlord entity solvent.
“In principle, they want to operate on the basis that they are preserving value in these assets, so that if or when the sanctions are eventually withdrawn, the effect of the sanctions is basically reversible,” Thomas said.
The goal is to generate just enough income to preserve the asset so it can be repatriated to the relevant country when sanctions are released.
If the landlord doesn’t have that license, then a tenant isn’t allowed to pay rent, Thomas said. And even if the license is in place, tenants might see a reputation risk in paying money to a sanctioned entity and choose to either withhold rent or vacate the building.
The 10 Fenchurch Street office building is owned by a British Virgin Islands company linked to Cambodian national Chen Zhi. In a statement in October, the UK government described Zhi as the leader of a “network that operates illegal scam centres, which trick victims across the world out of substantial sums of money and torture their trafficked workers.”
Zhi and his associates built at least 10 compounds across Cambodia from where they ran online scams and to which workers were trafficked.
They also accumulated a 19-property London portfolio with 10 Fenchurch Street and some residential assets.
Zhi was sanctioned by both the UK and U.S., with the UK freezing assets and U.S. authorities seizing $14B worth of bitcoin, the BBC reported.
The 10 Fenchurch Street building was bought for £95M in 2020. At that time, it was reported that the buyer was affiliated to Mighty Divine, described as an investment firm that represents rich individuals from mainland China.
A financial report from the seller, Hong Kong-listed Chuang’s Consortium International, said the buyer had acquired the building by purchasing the shares in its BVI-registered holding company.
When Bisnow visited 10 Fenchurch Street on a weekday morning earlier this month, the building was locked, the reception unlit, and there were no names on a board above the reception desk outlining tenants in occupation. It was unclear if tenants had moved out after sanctions were placed on the owner or if the building was already vacant.
Highlighting the complexity and idiosyncrasy of the sanctions system is the City office portfolio of the Libyan Investment Authority, which comprises three buildings: the 270K SF Jardine House on Crutched Friars, the 172K SF 14 Cornhill near the Bank of England and the 380K SF Beaufort House on St Botolph’s Street.
The LIA has been subject to UN sanctions since Libya's civil war in 2011, but, from the 1990s on, it had been an intermittent investor in the London office market, picking up the three buildings for more than £400M between 1992 and 2009.
When Bisnow visited the buildings in December, they reflected very different fortunes. Beaufort House looked relatively busy, with people bustling in and out of a well-lit lobby. An online search shows the building is let to a mixture of small financial services and tech firms.
On the other hand, Jardine House was boarded up and bordering on derelict, looking like it had been unoccupied for years. While it was locked, graffiti artists had clearly accessed the roof, with tags visible at the top of the building.
The building is something of a metaphor for London’s place in the flows of global capital brought about by conflict. The building was named for a previous occupant, insurance firm Jardine Lloyd Thompson, in which investment firm Jardine Matheson once owned a major stake.
Jardine Matheson was co-founded by William Jardine, a Scotsman who made his fortune in China in the 19th century as a commercial agent for opium traders. When Chinese Imperial Commissioner Lin Zexu destroyed 20,000 cases of opium seized from British traders in 1839, Jardine went back to London to urge Foreign Secretary Lord Palmerston for a forceful response, which resulted in the First Opium War between Britain and China.
Occupying a space somewhere in between is 14 Cornhill, which was open and decorated for the holidays when Bisnow visited, but a tenant schedule showed only one tenant, occupying two of the eight floors.
Accounts for a subsidiary of the LIA that manages its UK property assets said that while it had obtained a license to operate from the Treasury, it made a loss of £255K in 2024 as sanctions hindered its ability to generate income. That means the buildings have not been able to attract tenants, the accounts said.
The Treasury has given it a license to collect rents going back to 2013, but its bank accounts are frozen, so it can’t use the cash it has in its reserves.
Two other City of London office buildings occupy something of a netherworld.
The ownership of 85 Fleet Street, bought for £70M in 2012, and Austin Friars House, bought for £41M in 2013, has been linked to Said Gutseriev, who was placed on the UK’s sanctions list in 2022 following Russia’s invasion of Ukraine. The Gutseriev family is reported to have close links to Belarusian President Alexander Lukashenko, one of Vladimir Putin’s closest allies.
Gutseriev is subject to an asset freezing order, but the landlord entities which own the two buildings are not, a Bisnow review of Land Registry documents shows.
That is not to say they are flourishing. The tenant schedule at the 23K SF Austin Friars House shows just one tenant, a gym on the lower ground floor.
This building also occupies a small but significant place in British history. It is on the site of the former house of Thomas Cromwell, the son of a blacksmith who rose to become one of the most powerful men in England during the 16th century reign of Henry VIII, before his benefactor turned on him and had him executed.
Cromwell was renowned for his ability to strike a deal for his king and was immortalised in Hilary Mantel’s Wolf Hall trilogy of novels.
The 97K SF 85 Fleet Street is grade-II listed, built in 1935 and designed by celebrated British architect Sir Edwin Lutyens. It was once the home of news agency Reuters, but now the office element of the scheme looks sparsely occupied. Cord, the restaurant of the Parisien Cordon Bleu cookery school, still operates from the ground floor and is bustling of an evening.
In a final irony, one of its previous office tenants was the UK division of Russian firm Sberbank, which operated from the building until April 2022, when it went into administration after the parent company was hit by sanctions.
