Orion-Carval jv takes on spec development in City of London

European private equity real estate firm Orion Capital Managers has teamed up with its US-based peer, Carval Investors, for the speculative development of a 9,570 m² office and retail scheme in the City of London.

Carval, a subsidiary of Cargill, and Orion's European Real Estate Fund III have formed a 50:50 joint venture to work with City of London Corporation, the municipal government of London's main financial district, on the project. Quadrant Estates will act as development manager.

The joint venture has acquired the leasehold of the development site at 100 Cheapside, located between the Bank of England and St Paul's, from the City of London. The financial details of the acquisition were not disclosed but market sources suggest the price was in the region of £22 mln (EUR 27 mln).

CBRE acted for the developer and BNP Paribas acted for the City of London Corporation.

The site originally belonged to Irish developer Menolly Investments which had planned a mixed-use scheme at the location. After the developer defaulted on the loan, the leasehold reverted to the City of London which launched an auction process earlier this year.

The existing property will be demolished and the new scheme will comprise 8,733 m² of Grade-A office space and 836 m² of retail. The site is one of the last pieces of Cheapside to be redeveloped. Orion and Carval are aiming for BREEAM Excellent sustainability certification for the scheme.

The offices will target core City occupiers looking for Grade A space, while the retail component is likely to attract major brands looking for exposure to the City retail market on this busy thoroughfare, Orion and Carval said.

City Corporation's Cheapside Retail Initiative will be another tenant. The initiative aims to reinforce Cheapside as one of the City's main shopping destinations.

This is the second significant transaction at Cheapside in recent weeks. In late March, Invesco Real Estate (IRE) acquired a EUR 144 mln mixed-use complex at 107 Cheapside.

Invesco bought the property on behalf of a fund owned by Germany's largest public pension fund Bayerische Versorgungskammer (BVK). The vendor of 107 Cheapside was Menolly Investments.