Two Chinese investors have made their debut in the UK residential market by buying into one of London’s most high-profile development projects.
Citic Capital and Cindat Capital Management have together bought a 70% stake in Brockton Capital’s 60 Curzon Street, W1, once home to Marco Pierre White restaurant Mirabelle. The price paid values the site at around £200m.
The deal will allow the long-awaited scheme to begin early next year, having stalled amidst a cooling off of the ultra-high-end London residential market.
The end value of 60 Curzon Street is estimated to be £600m, based on anticipated sale prices as high as £6,000 per sq ft. Cindat expects to generate an IRR of around 20% on its investment in the 31-flat scheme.
Development financing at a 60% loan-to-cost ratio is being provided by a syndicate of banks, with existing lender Deutsche Bank leading a club likely to include Far Eastern lenders. Brockton will oversee development of the project, with completion scheduled for 2018.
It is the last remaining asset in Brockton’s first fund and its investors have granted Brockton permission to extend the life of the fund and retain its stake while building out the project.
Cindat is invested in $3.6bn (£2.4bn) of projects – including luxury residential schemes in New York, Chicago and Sydney – and manages $1bn of equity.
The company expects to invest £500m in the UK in the next two years, focusing on value-add opportunities.
Speaking at MIPIM Asia this week, Cindat chief executive Greg Peng said: “London is structurally short of housing and population growth has outstripped housing supply for decades. It is very hard to build in London as you are restricted by the green belt, and London is a magnet for aspiring talent from all over the world.”
Brockton co-founders David Marks and Jason Blank studied at MIT together with Peng, and Blank and Peng later went on to work together at Merrill Lynch.
Citic Capital is the investment management arm of Citic Group, which is invested in ABP’s Royal Albert Dock, E16.
Savills and Rothschild advised Brockton.