Canadian-US JV closes Woolgate debt workout

Ivanhoé Cambridge and TPG have completed the €310 mln acquisition of Woolgate Exchange in London nine months after a Malaysian fund pulled the plug on a deal.

The Canadian-US joint venture is paying about £5 mln less than the price Malaysian sovereign wealth fund Permodalan Nasional Berhad (PNB) was poised to pay for the 33,000 m2 trophy asset in April 2012. At the last minute PNB walked away from the acquisition which would have reflected a net initial yield of 5.5%.

Woolgate Exchange is situated on a 0.65 hectare freehold site in the heart of the City of London, close to the Bank of England.

The property has three underground levels, a ground floor and eight upper floors. The asset is currently 100% leased to Portigon, with sub-tenants including Investec Asset Management, Sidley Austin and the University of Chicago.

TPG, a US-based private equity firm, said the property was acquired through a complex and innovative financial structure. Ivanhoé Cambridge co-invested alongside TPG which originated the transaction. The asset will be co-managed by the joint venture.

In 2012, TPG entered into an agreement to acquire the junior loan from the Irish Banking Resolution Corporation. By working with the senior and junior creditors the partnership was subsequently able to acquire the asset in a proprietary transaction. Previously, the asset was held in a defaulted capital structure.

The purchase will partially repay the junior loan secured against the building, fully repaying senior bondholders.

Ivanhoé Cambridge is a real estate subsidiary of the institutional fund manager Caisse de dépôt et placement du Québec and has some €22 bn of assets under management. The transaction brings the total investment in London for Ivanhoé Cambridge to more than £400 mln over the past 12 months.

Ivanhoé Cambridge has €4.4 bn of assets in Europe, and the investor plans to open an office in London to help build a strong platform in the London capital.