Carlyle takes on prime London residential development

Private equity interest in high-end London residential projects continues as The Carlyle Group acquires a 250 year head lease to a central London block.

 The Carlyle Group this morning underlined its attraction to high-end London residential projects with a £36.5 million (€43 million; $57 million) investment on behalf of Carlyle Europe Real Estate Partners III (CEREP).

The Washington D.C. firm, which raised $3.4 billion for CEREP in 2008, has acquired a new 250 year head lease from The Crown Estate for a block at 88 St James’s Street near Green Park to enable it to mount a prime London residential development.

In a statement today, Carlyle said the sale had been carried out with the administrators for the previous head lease holder, Robert Harding and Carlton Siddle.

88 St James’s Street is a landmark Grade II listed residential and commercial period property next to St James’s Palace in one of London’s most exclusive districts. It currently comprises 40,000 square feet of gross area including 11 residential apartments and 14,000 square feet of commercial space.

Carlyle said it was ideally located for a proposed new prime residential development and that Carlyle would soon start work on a planning application to create a scheme to reconfigure the internal layout of the building and convert the property to high-end residential use. 

The Crown Estate retains the freehold to the property as part of its core central London holdings that include around 50 percent of the buildings in St James’s and where it recently launched a £500 million investment strategy.

The acquisition is Carlyle’s second investment into the prime residential market in London, along with Henry Moore Court located in Manresa Road, Chelsea, a sector which has proven to be resilient during the recent period of economic instability and continues to provide capital appreciation as well as desirable income returns, the firm added.

Carlyle added it would be working with Caraeno Management, development and asset management advisors for the property.

Robert Hodges, managing director at the US firm said: “Opportunities to acquire properties which lend themselves so perfectly to prime redevelopment in such a world renowned location are extremely rare. We are therefore extremely excited about returning this landmark building back to its former position as one of London’s finest residences.”

He added: “We will seek to identify and secure further opportunities within this appealing and robust asset class in our efforts to secure outstanding properties which we believe deliver strong returns for our investors.”

Today’s announcement coincided with that of another private equity real estate firm, Wainbridge, which said it had launched a “super-prime” residential development arm. 

The real estate investment, development and asset management boutique said it had launched Wainbridge Estates, as a super-prime, residential development and investment arm, while also revealing it had appointed Christophe Leriche as its new head of France. 

In a statement, the firm said Wainbridge Estates had been set up to capitalise on the increasing demand for super-prime residential developments in leading global locations and would focus on the top-end residential sector in London, New York, Paris, the South of France, the Caribbean and other locations that are sought after by ultra-high net worth individuals. 

The Wainbridge Estates investment vehicle will capitalise on market opportunities and provide the necessary capital expenditure required to undertake complex super prime projects in order to create value on behalf of its investors, it said.

Edouard Fernandez, principal and co-founder, said: “We believe that current economic conditions, with stock market volatility, low interest rates and the desire of individuals to buy into secure, tangible assets, combined with the ongoing global growth of the super-rich, makes this is a very attractive segment of the market, offering significant opportunities. With our long experience of working with ultra-high net worth individuals and investment and development skills, we are ideally placed to succeed in this market.”

Of Leriche’s hire, the company explained as well as continuing investment focus on London, the new appointment should help to provide further access to value-added office-based investment opportunities in the Parisian market, where Wainbridge has already been an active player for some time. 

“Through its mandated funds, Wainbridge will now extend its proven strategy of identifying, acquiring and actively managing value-add office opportunities within the Greater London market, that require some degree of capital expenditure, to Paris’ CBD and the Western Paris suburbs,” said the company.

Leriche has more than 23 years’ experience in the real estate investment, development and private equity sectors. He joins from Hines, where he most recently held the role of senior project director.