Westbrook Partners has withdrawn its legal bid to acquire the freehold of the prestigious London residential complex, Dolphin Square, amid falling property values.
According to people familiar with the matter, Westbrook has discontinued its High Court claim to buy the freehold but is believed to be keeping the situation under review. Westbrook declined to comment.
The firm bought a 27-year leasehold interest in the Westminster property – home to politicians, peers, judges, lawyers, barristers and senior military officers – for around £176 million in 2005. The freehold has always belonged to UK insurance company, Friends Provident.
However, under UK legislation passed in 2002, individual owners of leasehold interests in a block of flats can join together to force a landlord to sell his freehold interest.
Westbrook lodged such a legal claim in 2007, but since then property values have declined dramatically in London, meaning Westbrook could potentially acquire the freehold for less money by withdrawing this claim and filing another one at a later date.
Sources said Westbrook was keeping the situation under review, with the view that it might take steps to acquire the building’s freehold – or extend the existing head lease by around 90 years – at a future date.
Dolphin Square houses about 1,200 flats close to the Houses of Parliament that are leased almost entirely on decades-old regulated tenancies or short-term assured shorthold tenancies.
In April last year, Westbrook set up more than 600 Jersey-domiciled companies, each of which owns two of the Dolphin Square apartments on leases of around 26-years.
Under the Commonhold and Leasehold Reform Act 2002, a freehold can be purchased provided two-thirds of the properties in question are held on long leases of more than 21 years, and if 50 percent of those property owners vote for the move.
Dolphin Square’s most famous resident was Christine Keeler, a woman euphemistically called a show girl and model who at the height of the Cold War caused a political storm in 1960s London by sleeping with the then-War Minister John Profumo. Unfortunately for Profumo, Keeler was also sleeping with Russian spy and Soviet commander Yevgeny Ivanov. Profumo stepped down after lying to the House of Commons about his relationship with Keeler.