China’s controversial new London embassy was granted approval by the government this week — and but for a distressed real estate debt deal, it may never have happened.
The embassy will be built on a 5.2-acre site called Royal Mint Court just to the east of the City of London, near Tower Bridge. From 1809 to 1967, it was the site of Britain’s Royal Mint, where all the country’s coinage was minted.
:quality(75))
After that, the buildings were converted into 460K SF of offices, including the Johnson Smirke building, which was built in 1811 and is Grade II-listed.
Irish investors Donal O'Mahony and Tom Quinn bought the leasehold of the site in 2002. The freehold was owned by The Crown Estate, and the structure roughly equated to a 50-50 ownership.
In 2006, at the height of the pre-Global Financial Crisis lending boom, Barclays securitised an £84M loan used by O’Mahony and Quinn to refinance their leasehold stake in the scheme, selling it on to bond investors.
Delancey bought The Crown Estate’s freehold ownership stake in 2010 for £51M as distress for the other owners mounted, and it became apparent that the site was likely to be put up for sale.
By 2013, the offices at the site were 60% vacant and emptying fast, and the value of the leasehold stake had fallen to £32M. The loan was called in that September, and receivers were appointed to O’Mahony and Quinn’s stake.
The expectation was that Delancey would buy the leasehold ownership, unite the site under one share and redevelop the site. Instead, private investment firm LRC bought the loan and took over the leasehold ownership of the site.
The duo worked up plans for a major redevelopment, which would have built 600K SF of new offices alongside new retail and leisure space. Planning permission was granted in 2017.
But in 2018, the Chinese government swooped in with a knockout offer, paying £230M for the site and accelerating plans for a new embassy.
Architecture firm David Chipperfield designed a new 600K SF scheme that includes accommodation for 200 staff.
It has been a lightning rod for controversy, attracting complaints from local residents about its size and scale and concerns about national security given its proximity to the City of London.
The government called the scheme in after previous rejections and took over the planning decision from Tower Hamlets. It said national security concerns had been assuaged by China as part of modifications to the project.
)
)
)
)
)
)
)
)
)
)
)
)