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Delancey faces international competition over Royal Mint Court leasehold

Delancey, the real estate investment firm founded by Jamie Ritblat, will compete this week against a raft of private equity funds, international property investors and developers to acquire the leasehold securing the former home of the Royal Mint by Tower Bridge, CoStar News has learned.

First round bids for the six separate leaseholds with a 100-years remaining over the 460,000 sq ft Royal Mint Court office complex are due on Thursday, in a sales process which is being managed by Julian Clarke and Matthew Nagle of Savills, who were appointed as LPA receivers last September.

While Delancey has been assumed frontrunner for some time, given its ownership of the freehold interest which was acquired for £51m from The Crown Estate in June 2010, a number of private equity funds, developers and property companies are all still weighing bids.

The initial long list of bidders has shortened somewhat, given the influence of Delancey’s freehold interest which can restrict the decision-making of the leaseholder. Under the terms of the leasehold, Delancey is entitled to 50% of the Royal Mint Court rental income and has the final say over new leases as well as lease extensions.

However, CoStar News understands that bids are still expected from Starwood Capital, D2 Private, Kildare Partners as well as potentially Indian property developer Lodhagroup, Signature Capital and Moorevale. In addition, one or two left field overseas bidding consortiums could also emerge on Thursday.

The Grade II-listed Royal Mint Court office complex comprises four separate buildings with tenants including anchor tenant Barclays Bank, which has sublet its space to Deloitte, and Old Mutual.

All leases expire by the end of the year, paving the way for a likely major asset re-positioning play, ranging from an overseas embassy to a hotel to a mixed use residential, retail, leisure and office complex.

Savills’ Clarke and Nagle launched their marketing of the Royal Mint Court leasehold on 4 February, with a guide price of in excess of £30m.

Given the idiosyncratic inter-relationship between the leasehold and the freehold, the near-term maturity of all remaining Royal Mint Court leases as well as the challenges in securing certain planning approvals from Tower Hamlets, bids are expected to come in both above and below the £30m asking price, CoStar News understands.

This compares with the £114.7m valuation by Atisreal, which subsequently rebranded as BNP Paribas Real Estate, on 29 December 2005 when legacy borrower, Gulldale Limited, refinanced a maturing Bank of Scotland loan with a £98m whole loan by Barclays.

The whole loan was comprised of a £83.175m senior loan, which Barclays Capital securitised in the wider Equinox Eclipse 2006-1 CMBS transaction, and a £14.8m B-Loan.

Ahead of the maturity of the whole loan last October, loan servicer Capita Asset Services appointed Clarke and Nagle as LPA receivers and Grant Thornton’s Trevor O’Sullivan and David Dunkley as administrator over the two Gulldale special purpose vehicles which house the leasehold.

Gulldale’s leasehold interest in the Royal Mint Court was formerly owned by two private Irish investors, Tom Quinn and Donal O’Mahony.

All parties declined to comment.

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