Billionaire financier George Soros’s £1.5bn property fund with Jamie Ritblat’s Delancey is poised to make its first major office investment.
Delancey is in talks to buy a £30m West End headquarters building from troubled insurer Britannic Asset Management.
The 50,000 sq ft 6 Chesterfield Gardens, W1, will be the first office acquisition for the opportunity fund set up by Delancey.
At least £300m of the equity comes from investors, which include Soros.
Soros’s Morston Nominees is the largest shareholder in Delancey’s old Tribeca fund.
The equity will be geared up to at least £1.5bn and Delancey is aggressively seeking stock for the seven- to 10-year fund.
Since setting the fund up last month, Delancey has bought only the £30m, 60,000 sq ft Sainsbury’s in Pimlico, SW1.
Ritblat is sourcing office and retail stock in the UK and Ireland.
Chesterfield Gardens was bought and refurbished by Britannic two years ago but has failed to fully let.
Earlier this month, energy giant Chevron Texaco took 15,000 sq ft, paying around £48.50 per sq ft, some £16 per sq ft less than Britannic had initially marketed the building for.
Three floors remain vacant and Delancey had been tipped as a potential occupier, because it plans to leave its present Portman Square HQ to redevelop the building.
However, a source close to the deal said: “Delancey is having planning problems with its Portman Square scheme and will not need to move for another year or so.
“But it could move other tenants from Portman Square into Chesterfield.”
Britannic has been trying to sell the building – along with several other property holdings – for over a year.
It had wanted £33m and offered a two-year rent guarantee at higher than the £52.50 achieved with Chevron, but Delancey is not expected to take the guarantee.
The source added: “The building fits within Delancey’s model of prime location and good tenants but with plenty of angles for future growth.”
The deal will take Britannic’s property sales since June to around £150m. Crossland Otter Hunt is advising Britannic.
References: EGi News 03/11/03
