EXCLUSIVE: Ares Buys Famous City Building After Department Store Closure And Plans New Wolseley Site
U.S. private equity firm Ares Management has bought one of the City of London’s most recognisable buildings and is planning to install one of London’s most famous restaurants.
Ares has bought the 98K SF 68 King William St. from Saudi Arabian investor Al Rahji Invest, according to documents about change of directors filed at Companies House. It teamed up with family office investor Black Mountain Partners to undertake the deal. A spokesman for Ares confimed it had bought the building but declined to comment further.
The deal came about after House of Fraser, one of the building’s two tenants, used a company voluntary arrangement to break its lease and vacate the building. It occupied 58K SF of the building across four floors and a basement and paid about £2.3M a year in rent, according to loan documents.
House of Fraser has vacated stores across the UK, and the owners of those buildings are starting to work out new uses for the assets, or sell to new owners willing to take on the redevelopment risk.
In Ares’ case, it will convert the ground floor of the building to a restaurant, which will be the second London location of the Wolseley, the Mayfair eatery loved by celebrities like Kate Moss and Emma Watson and the business world alike.
The success of the Ned hotel, with multiple high-end restaurants on the ground floor, has shown that the City can be a profitable location for restaurateurs. The founders of the Wolseley, Jeremy King and Chris Corbin, have been looking for a second venue for some time.
The upper floors of the nine-storey building will be refurbished as offices and leased up, highlighting how Ares has confidence in the resilience of the City leasing market. Regus occupies 40K SF in the building on a lease that expires in 2023, paying £2M a year in rent, which works out at £50/SF.
The freehold building was built in 1921 and was originally the headquarters of the Guardian Assurance Co. and an early home of Lloyds Bank. Its prominent position directly in front of the northern end of London Bridge meant it was sometimes referred to as the “Gateway to the City”. Its three-sided clock with a gold owl on top, the symbol of Guardian Assurance, and a copper-domed Portland stone cupola are highly distinctive features.
It was used as offices until 1990 and then lay vacant until 2000 when it was redeveloped by London & Regional behind the original facade. House of Fraser opened in the building in 2003.
Al Rahji Invest bought the building from L&R in 2012 for about £65M, with the building sold so that L&R could use the money raised to pay down debt that had matured.
The price paid was not disclosed, but the last valuation of the building was £75M, according to Companies House documents.
When Al Rahji bought the building it would have thought it was a very solid investment — House of Fraser’s lease was supposed to run until at least 2033. But when the department store exited the lease it decided to sell rather than take on the repositioning of the building itself.
