Almacantar has concluded its strategic review that has seen its existing investors double down on the London market instead of selling out.
A potential deal with Related had been considered during the process but at a board meeting yesterday it was agreed that no new investors would come into the vehicle or buy the company as a whole.
Related, which formed a joint venture with Argent in 2015 to pursue the development of urban projects of scale in London and the UK, had been considering a purchase of the whole platform and integrating the Almacantar management.
Almacantar is now expected to invest around £1bn of equity into the London market from its existing backers and balance sheet over the next three years, which will likely mean it will buy between four and eight new projects.
Larger plays possible
It is now also looking at larger, more strategic plays on which it would look to form joint ventures with partners including those that it held talks with during the recent process. Almacantar has been keeping a watching brief on CapCo’s Earl’s Court project, which it is looking to spin off from its Covent Garden estate in order to create two listed companies.
It is understood that Almacantar met swathes of investors interested in buying the leased and developed stock it owned at the start of the process, others willing to back existing development projects or a new pipeline, although it met few that were willing to back the full combination.
The company has four European permanent capital partners that are thought to include the Agnelli family’s Exor; the Hans Wilsdorf Foundation, the charitable trust that owns Rolex; and the Wertheimer family, which owns fashion brand Chanel.
Liquidity event
Almacantar was established by former Land Securities executive director Mike Hussey in 2010 and at that time investors were promised the opportunity of a liquidity event in 2018 through either asset sales or the sale of the company.
When Almacantar kicked off the search for a prospective partner in January through Rothschild its £2bn portfolio included 125 Shaftesbury Avenue, WC2, and CAA House, WC2, but these have since been sold for £290m to KB Securities and for £165m to Seaforth Land backed by QuadReal Property Group, respectively. These sales have meant that a large chunk of liquidity has been returned to shareholders.
The Almacantar portfolio is currently made up of the former Shell Centre and Southbank Place, SE1; Marble Arch Place, W1, and Centre Point, WC1.
One Southbank Place completed
One Southbank Place, all 272,450 sq ft of which was prelet to Shell in 2015, has recently completed but it is unlikely to be sold until after the energy firm’s first rent review, given that its leasing deal was struck at around £55 per sq ft and rents in the area are now closer to £75 per sq ft. The 280,000 sq ft Two Southbank Place, which is let to WeWork and completes in November, is also unlikely to be sold soon owing to the new commitment by the shareholders.
The 82 flats in the iconic Centre Point are now 50% sold and average sales prices have been around the £3,500 per sq ft mark. The surrounding 48,000 sq ft of retail and leisure is also due to complete before the end of the year.
Marble Arch Tower, which will contain 54 luxury flats, is not due to complete before summer 2020 but is already 20% presold and it is unlikely Almacantar will push hard to sell more units before the project is completed.
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