TPG Capital, Ivanhoé Cambridge net £265m London office

TPG Capital, the US private equity firm, and Canadian real estate company, Ivanhoé Cambridge, have combined forces to buy a prime London office called Woolgate Exchange for £265 million (€310 million; $417 million).

TPG, which only recently began looking for real estate assets in Europe and Ivanhoé, which has portfolio in Europe in excess of $6 billion, has acquired the 351,000 square foot property near to the Bank of England in the heart of the capital’s financial district.

TPG originated the deal, but turned to its Canadian partner to form a joint venture, said Ivanhoé, one of the ten largest real estate companies in the world with more than $30 billion worth of property and the real estate subsidiary of the Caisse de dépôt et placement du Québec, one of Canada's biggest institutional fund managers. Ivanhoe also revealed today how it was planning to open an office in London.

Said to be acquired through a “complex and innovative financial structure”, TPG first became involved with the office in 2012, when it struck an agreement to buy its junior debt from the Irish Banking Resolution Corporation, which was formed to take on the asset recovery work from Anglo Irish bank and the Irish Nationwide Building Society.

After buying into the debt, TPG proceeded to work with senior and junior creditors in the loan structure, culminating in today’s announcement that the new partnership had acquired the asset in a proprietary transaction. Previously, the asset was held in a defaulted capital structure, it added. The purchase will partially repay the junior loan secured against the building and fully repay senior bondholders.

Woolgate Exchange is situated on a 1.6 acre freehold site with a three underground levels, a ground floor and eight upper floors. It is currently completely let to tenants such as Investec Asset Management, Sidley Austin and the University of Chicago.

Kelvin Davis, a partner at TPG, and head of the firm’s real estate platform, said: “This innovative transaction again highlights our ability to source and execute quality property investments through complex CMBS restructurings. We believe there will be a number of other similar opportunities throughout Europe in the years ahead.”

Daniel Fournier, chairman and chief executive officer of Ivanhoé Cambridge, called Woolgate Exchange as being among the “outstanding assets” in the London market.

He also revealed how the real estate company was planning to opening an office in London as a further marker. Said Fournier: “Based on our strong European asset portfolio valued at more than Cdn$6B, which we are currently repositioning and our knowledge of the London market, we are building a platform with the intention of opening an office in London.”