Orion Fund to develop 30-story residential tower on City Road, London (UK)

Orion European Real Estate Fund III CV, sponsored by the property fund manager Orion Capital Managers, has bought a residential development site overlooking the City Road Basin at 259 City Road, London EC1, on which it will develop a £150m luxury residential scheme.

259 City Road view from new Civic Space

Completion of the project is expected in 2014.

This is the first time that Orion has entered into the buoyant Central London residential development market and it is one of the first residential schemes to be undertaken by a private equity fund.

The vendor, 259 City Road Limited (259CRL), is owned 50-50 by developer Groveworld and City Road Basin Limited, itself a partnership between British Waterways and Miller Developments

The development will comprise a 30-story tower with mainly one- or two-bed apartments and larger penthouses. The tower will sit on top of a podium with ground and lower ground levels which include restaurants, a swimming pool, a health club and parking for 78-cars. Completion is expected in 2014.

Orion has bought the site via units in 259 City Road Unit Trust. Orion European Real Estate Fund III CV closed at the end of 2009 with total commitments, above target, of €1.28 billion.

Groveworld will act as development manager on behalf of Orion, which will take a 999-year lease on the site.

Since British Waterways and Miller Developments first became involved with the regeneration of City Road Basin, in 2001, they have worked with partners Groveworld to unlock the potential of this site, set on one of the largest open water spaces in central London.

The London Borough of Islington have also been very supportive of the master plan approach adopted by 259CRL, who have carried out significant improvements to the public realm, particularly at the head of the basin, adjacent to the site and are already developing a 13-story affordable housing block on part of the site which does not form part of the transaction with Orion and which has been purchased by Family Mosaic, the affordable homes provider.

The project lies halfway between the City of London and Angel, Islington. It is within walking distance of Bank but is also close to the restaurants, cinemas and retail attractions of Islington.

Aref Lahham, Director of Orion Capital Managers, said: "As a private equity fund manager, Orion moves into sectors when the time is right and for Central London luxury residential property aimed at international, as well as domestic purchasers and investors, we believe the time is now. We are looking for more residential opportunities of this nature."

"At 259 City Road we have found a project with planning permission that has been expertly put together by 259 CRL," adds Britta Harper of Orion Capital Managers.

Jeff Duggan, Director of Groveworld, said: "We are excited to be working with Orion. Groveworld is a very experienced developer in this part of London and combined with Orion's financial expertise, we believe this project will come to the market at just the right time."

Source: Alywin Communications

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