Evans Randall completes £242.5 mln. Drapers Gardens acquisition (UK)

Evans Randall, the privately held UK investment banking and private equity group, has completed its acquisition (as previously announced in August 2010) of the recently-developed Drapers Gardens building in the City of London for £242.5 million (approx. €276.6 mln.), from a joint venture including Canary Wharf Group and a subsidiary of the Morgan Stanley Real Estate Funds (MSREF).

Drapers Gardens

The prime 27,000-m² office building is let in its entirety to BlackRock on a 25-year lease.

Evans Randall invested in the transaction together with a number of long-standing private clients. Eurohypo provided senior debt and Pramerica Real Estate Investors provided mezzanine debt for the acquisition.

Kent Gardner, Chief Executive of Evans Randall, said: "In a market where many transactions are constrained by debt and equity supply, we are delighted to have acquired such an excellent asset. The quality, scale and growth potential of Drapers Gardens fits well with our investment strategy and we continue to seek similar assets in prime locations."

The prime 27,000-m² office building is let in its entirety to BlackRock on a 25-year lease, with five-yearly upward only reviews, at a gross annual rent of £13.5 million. The full purchase price reflects an initial yield of 5.2%. At first rent review, the rent will increase by a minimum of 2.5% per annum and a maximum of 4.5% per annum, bringing certainty of rental growth.

Evans Randall's retained adviser CB Richard Ellis represented them in the transaction.

Michael Evans, Chairman of Evans Randall, said: "Drapers Gardens is the latest in a series of significant transactions for Evans Randall in what has been a good year for us. We completed the Riverbank House development and secured a new 25.5-year lease to Man Group plc. In addition, we refinanced 5 Canada Square, one of our prime Canary Wharf assets, and sold Milton Gate and Condor House, the latter achieving a record yield in this cycle."

Commenting on the Drapers Gardens funding, Andrew Macland, Managing Director of Pramerica Real Estate Investors, said: "Drapers Gardens is a significant benchmark of post-crisis funding for real estate and demonstrates the success that can be achieved through the collaboration of debt funds with sponsors and senior lenders in a capital constrained market. It underlines our ability to provide finance for all types of real estate transactions and is a clear indication of the important role fund strategies such as ours will play in the future."

Source: FD

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