HK$800m ICBC Loan Secured Against Buckingham Gate Buy
Hong Kong investor Tai United Holdings has secured an HK$800m (£79.3m) loan from Industrial & Commercial Bank of China (ICBC), which will ultimately be secured against 6-9 Buckingham Gate, SW1, a high-end residential development next to Buckingham Palace which the investor bought this week for £112m, CoStar News can reveal.
The facilities, which include terms imposing specific performance obligations on businessman Chua Hwa Por, the ultimate controlling shareholder of Tai United, comprise a Tranche A facility – a three-year, HK$500m loan which carries an interest rate at the prevailing HIBOR - or LIBOR relating to advances made in US$ or GBP - plus a margin of 2.8% per annum.
The facilities also include a one-year HK$300m revolving credit facility priced at HIBOR plus a margin of 2.8% per annum.
Tai United is using loans advanced to it last month by Tai He Financial Group Limited, a company wholly-owned by Chua, which were used to finance the acquisition of 6-9 Buckingham Gate, as collateral against the ICBC loan. The mortgage on an office property owned by Excel Fine Holdings Limited, a company ultimately owned by Chua, will also be used as collateral.
Tai United originally used funds to secure its purchase of 6-9 Buckingham Gate, SW1, from a HK$3,000m (£297.58m) facility from Tai He. Each drawdown under the facility carries interest at 4.5% per annum and is repayable within 18 calendar months from the drawdown.
Tai United Holdings, a Hong Kong-listed group which is more used to trading medical equipment and mining tungsten in Mongolia, struck a deal at the weekend to buy 6-9 Buckingham Gate, a prime residential block from a joint venture between Brockton Capital, Mountgrange and The Rothschild Foundation - the philanthropic interests of Lord Jacob Rothschild.
The acquisition of the property, which was bought through BG Residential Holdings, Tai United’s Jersey-registered vehicle, marks the investor’s first foray into the London property market. A purchase price of £112.20m was agreed for the entire issued share capital of the holding company in which the property sits. The purchase price also includes a £24.25m loan facility plus £11.04m in accrued interest.
Tai United struck an acquisition agreement with the owners on Saturday having entered into an exclusivity agreement on 12 August. Due diligence was carried out within an exclusivity period which initially ended on 16 September, before that was extended to 24 September.
Brockton acquired the prime asset opposite St. James’s Park in 2006 before gaining planning permission to increase the floor area by 50% two years later. Brockton then signed a JV with the philanthropic interests of Lord Jacob Rothschild and Mountgrange in 2011 before delivering a £100m-plus scheme in 2014.
In a note to stakeholders, Tai United said: “The directors consider that the recent referendum result of BREXIT and the recent depreciation of British Pound Sterling provide the company with an opportunity to acquire quality assets in the United Kingdom at an attractive price.
“Despite the recent volatility of the property market in London, the directors are optimistic about the prospect of the property market in London and believe that quality assets are able to withstand the short term volatility of the property market.
“The group intends to hold the properties for investment purposes and intends to lease the properties for rental income after completion.”