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UPDATE: Carlyle Group Buys Six 'White Tower' Assets For GBP671 Million


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   By Anita Likus and Ainsley Thomson 

LONDON -(Dow Jones)- Private equity firm The Carlyle Group LP Thursday said it had bought six landmark London properties--formerly part of entrepreneur Simon Halabi's GBP1-billion property portfolio--for GBP671 million.

The properties, comprising the Thames Portfolio and Alban Gate, total in excess of 1.6 million square feet and currently include tenants such as JP Morgan Chase, UBS and IBM. They generate over GBP62 million of rent annually.

The properties form part of the high-profile commercial mortgage-backed securities, or CMBS, deal called White Tower 2006-3. The deal has been closely-watched because it was the first U.K. CMBS to be placed in liquidation since the start of the financial crisis.

Carlyle Group bought 60 Victoria Embankment, the 420,000 sq ft of office buildings fully let to JP Morgan Chase; Ludgate House, the 170,000 sq ft office building let to United Business Media on the south bank; Sampson House, the 350,000 sq ft building let to IBM, Millennium Bridge House, a 200,000 sq ft office building fully let to UBS; BSI Tower, located in Chiswick, west London, which is fully let to BSI Management Systems Ltd. and Alban Gate, the 382,000 sq ft office property located on London Wall in the heart of the City and fully let to JP Morgan Chase.

Carlyle European Real Estate managing director Robert Hodges said each of the properties has an existing secure income profile and said there were also opportunities to manage and develop the portfolio, which he believes will "add significant value".

Carlyle Group bought the properties on behalf of its third pan-European real estate fund, Carlyle European Real Estate Partners III, which was launched in June 2008 with EUR2.2. billion of equity.

It also secured long term financing from a syndicate of banks led by Societe Generale.

The White Tower CMBS is backed by a GBP1.45 billion loan, which Halabi took out to buy nine London properties.

CMBS are bonds serviced with the payments made on one or more commercial mortgages.

CB Richard Ellis Loan Servicing, the special servicer that is charged with recovering sufficient money to repay debt holders, put eight of the properties up for sale in March--including the six properties bought by Carlyle--after the falling value of the property portfolio caused the breach of a loan-to-value covenant and subsequent default.

At the time, CB Richard Ellis said the sale of the properties was likely to allow the full repayment of the White Tower Class A notes and "at least a significant proportion" of Class B notes.

The Class A notes have an outstanding balance of around GBP678 million, while around GBP171 million of Class B notes remain outstanding. There is also GBP300 million of junior ranking debt outstanding.

Last month, real estate investor Hammerson PLC (HMSO.LN) bought the Leadenhall Court building for GBP65 million, and the West End of London Property Unit Trust bought the New Court building for GBP60 million.

CB Richard Ellis Thursday said the gross proceeds are GBP793 million from the sales.

The ninth property in Halabi's portfolio, Aviva Tower, is being held by CB Richard Ellis as collateral for the GBP1.45 billion loan. CB Richard Ellis said it would provide an update in relation to Aviva Tower in due course.


-By Anita Likus and Ainsley Thomson, Dow Jones Newswires; +44 20 7842 9407;

(Mark Brown in London contributed to this article.)


(END) Dow Jones Newswires

July 08, 2010 10:02 ET (14:02 GMT)

Copyright (c) 2010 Dow Jones & Company, Inc.

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