Carlyle in £308m London exit

An international consortium has exchanged contracts to acquire Sampson House and Ludgate House from private equity giants The Carlyle Group for a £1 billion redevelopment of London’s South Bank.

Washington, DC-based private equity firm, The Carlyle Group, will sell London properties Sampson House and Ludgate House to a consortium, comprising of the UK property company Native Land, Singapore’s Temasek and Hotel Properties Limited, and Malaysia’s Amcorp Properties for £308 million (€421 million; $456 million).

Carlyle bought the properties five years ago as part of a package of six landmark London properties that were formerly part of the White Tower 2006-3 CMBS which was acquired for £671 million. The investment was made on behalf of the firm’s €2.2 billion Carlyle European Real Estate Partners III that was launched in 2007.

“Ludgate House and Sampson House are the last two properties from the WhiteTower portfolio of six assets we acquired in 2010 and this transaction marks the conclusion of what has been a very successful investment on behalf of our investors,” commented Mark Harris, managing director at Carlyle.

Carlyle received planning permission last year to develop a major 1.4 million square foot residential and office project in place of the two buildings and, as announced on June, 10 2014, it was seeking a funding partner to progress the development, which has been launched as ‘Bankside Quarter’.

However, the firm has now sold the properties to the consortium who will press ahead with the Bankside Quarter development. The development will comprise of 489 apartments and 288,000 square feet of offices, as well as retail, leisure and cultural facilities. When completed, the project will comprise five residential buildings and four office buildings.

The development is expected to be far higher than the buildings before at 49 storeys versus 13. It is also slated to enable new routes reconnecting the eastern and western sides of a railway viaduct where the existing buildings have formed a barrier since the 1970s. Native Land was appointed as development manager to the consortium.

Native Land intends to deliver the project in a series of phases, with the first phase including a 49-storey tower comprising 211 apartments fronting the River Thames. The subsequent phase should include a Grade A office building, with later phases including the redevelopment of Sampson House, which is currently leased to IBM until 2025 but with a mutual break option in June 2018.

The planning consent also requires the consortium to pay an additional £65 million to Southwark Council in lieu of affordable housing.