NEW YORK CITY-Steve McCoy and Hiroshi Nagata of Manhattan-based Sumitomo Real Estate Sales spent two years navigating the complexities of a deal to acquire the leasehold on Victoria Street’s Ashdown House in London for a British investment consortium. While fending off unsolicited bids by Arab and German companies to the owners, they sought to bring what McCoy calls the “roller coaster ride” of negotiations to a close. No one on either side of the deal would disclose the selling price, but industry insiders say it was £100 million, or at yesterday’s exchange rate, $145 million.

Shuwa Ashdown House Corp., an American-based subsidiary of Shuwa Investments Corp. of Tokyo, purchased the leasehold interest of Ashdown House in 1989. This was 100% of the subsidiaries’ share capital, McCoy explained in an exclusive interview with Shuwa did not ever acquire the freehold interest, ownership of the land, which remains in the possession of the Church Commissioners for England. McCoy explains that this type of transaction, rare here, is common in London.

The consortium Sumitomo represents, British Ensign Estates Ltd., Allied Commercial Holdings Ltd. and Galvine Ltd., has now, as of the official closing last week, acquired Shuwa Ashdown House Corp., thereby acquiring the leasehold, McCoy reports. “Post closing, they can either own Shuwa or transfer shares,” he adds. “The London market seems to go for leasehold deals as opposed to conventional property deals.”

What the consortium will get is the profits from rent on a total of 226,000 sf of space. Of that, the Secretary of State for the Environment rents about 190,000 sf as office space. “This bond lease, which provided a comfort factor–knowing the tenant will always pay its rent–is one of the key elements that made this leasehold deal so attractive,” says McCoy. The other approximately 36,000 sf is dedicated to retail space with such tenants as the Royal Bank of Scotland, Abbey National Building Society, Boots Plc. and the Body Shop. There is also an in-building garage with 107 spaces.

What also made this so attractive, explains McCoy, is the neighborhood. The building, adjacent to the pedestrian piazza before Westminster Abbey, is in the Victoria section of London, which is a “very desirable niche market,” says McCoy. “The investment group perceived mid- to long-term value in the leases. Rents in Victoria have increased for office and retail. The leaseholders will realize significant increases in yields.”

The obstacles stemmed from Shuwa Ashdown’s reluctance to part with the leasehold for less than the asking price. “I’ve never dealt with a buyer as tenacious,” says McCoy. “They stuck with us and we got the job done. The seller had high expectations; there were times negotiations broke down. Things accelerated this January when the Tokyo HQ decided to sell.” The final selling price estimated by insiders for the deal corresponds with what London papers reported as their estimates for the worth of the deal two years ago.

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