EXCLUSIVE: King Charles' £500M Luxury Scheme Neighbour Goes Into Administration
The company that owns a super luxury residential development next door to Buckingham Palace has gone into administration, Bisnow has learned.
Partners from FRP Advisory were appointed to Palace Revive Development at the end of last month. The company owns 1 Palace Street, a 271K SF block in west London next to Buckingham Palace. The development comprises 72 luxury apartments, a restaurant and health centre. It has frontages on Buckingham Gate and Palace Street, and some of the apartments have views into the gardens of Buckingham Palace.
Accounts for the company from the end of 2019, filed in September 2020 and the last that are publicly available, said that Palace Revive is owned by SHUAA Capital, a Dubai-based investment firm. The site was acquired by Abu Dhabi Financial Group for £310M in 2013, and ADFG merged with SHUAA Capital in 2019.
Administration is a UK process similar to Chapter 11 bankruptcy in the U.S.
The scheme is being developed by Northacre, a luxury residential developer, which is also owned by SHUAA and ADFG. Luxury hotel brand The St. Regis has been tapped to provide branded residences. Built in 1860, the building was once home to one of London’s first five-star establishments, the Palace Hotel.
Completion of the scheme has been delayed several times. It was initially scheduled to deliver in 2018, Northacre’s former CEO said in an interview in 2015, but that timeline slipped, and then the project was further delayed by the onset of the pandemic.
When Bisnow visited the site Tuesday, the entrance to the scheme on Palace Street was completed and the reception desk was manned by a security guard. The frontage on Palace Street had been completed, but construction hoardings and scaffolding still covered the longer frontage on Buckingham Gate, directly opposite Buckingham Palace.
SHUAA, Northacre and FRP declined to comment on questions about the background to Palace Revive’s administration or the strategy for the scheme going forward.
As a Jersey-based company, Palace Revive is not required to file accounts that are publicly available. But in 2019, the company issued bonds that were listed on the International Stock Exchange based in the Channel Islands, which gives an insight into its finances.
The accounts for the year to December 2019 said that Savills had undertaken a “Red Book” valuation that gave the scheme a gross development value of £512M, a price per unit of £3,273 per SF. The company’s management had undertaken its own valuation and estimated a GDV of £612M, or £3,947 per SF. In the accounts, the scheme was held at a carrying value of £412M.
At the end of 2019, Palace Revive had £353M of debt: acquisition and development facilities of £288M owed to First Abu Dhabi Bank and £65M in bonds listed on the International Stock Exchange, which had been bought by parties related to the company’s owners.
Companies House documents said that the ultimate beneficial owner of Palace Revive is His Excellency Abdulhamid Mohammed Saeed Al Ahmadi, a former governor of the Central Bank of the UAE, by dint of him owning more than 25% of the company’s shares.
The loans from First Abu Dhabi Bank had been scheduled to mature in December 2020, but they were extended to December 2021, the accounts said. The interest rate on different parts of the loan ranged from Libor plus 3.25% to Libor plus 4.5%. Covenants on the loan included the need for the debt not to exceed 68.5% of the gross development cost, and the need for the scheme to achieve £125M in pre-sales by June 2018. The loan was not in breach of any covenants at the end of 2019.
A notice on the International Stock Exchange last December said that the maturity on Palace Revive’s £73M of outstanding bonds had been extended from September 2022 to December 2023.
In an interview with the National newspaper in the UAE in December 2020, Mustafa Kheriba, then an executive director at Northacre, said that 60% of the homes at 1 Palace Street had been sold, but the pandemic had slowed the pace of sales with international buyers not able to travel to London. Kheriba is no longer with the company.
Accounts for Palace Revive said that as of December 2019, 36 of the 72 apartments had been sold. Of these, 12 were sold to parties related to the company, raising £34M. A further four units were sold to GFH Financial, a company of which a shareholder in Northacre was chairman, raising a further £31M.
