View more on these topics

Doric roars into the City

Doric Asset Finance, is aiming to raise £170m from UK and German investors for Geno Lion Plaza GmbH & Co KG, a closed-ended fund that invests in a retail and office building in the City of London.

Lion Plaza is a redevelopment of Grade II listed 19th century building that was bought by the fund in November 2005, when the building was repossessed from the developers. At the time, the property was 78 per cent let, and is now fully occupied.

The property was bought using a 15-year interest-only fixed-rate loan with HSH Nordbank AG. The money raised from the share offer will be used to repay the interest on the loan. A £165m bridging loan was also taken out and will be repaid by December 31 from the money raised. The loan was underwritten by a bank, which has guaranteed the repayments. Doric says when the money is raised from investors the debt will be erased from day one, with nothing left to chance.

According to Doric, the fund is effectively a fixed income fund, which assumes returns of 6 per cent a year plus growth potential. It says Lion Plaza will benefit from leases that have an average of 18 years left to run, as this will reduce volatility.

Tenants, which include international law firm White & Case, Starbucks and Superdrug, share full repairing, maintenance and insurance costs. Upwards only rent reviews take place every five years and some are due over the next two years. This will help to provide a stable income stream.

According to Doric, demand for top quality space in the City is likely to exceed supply and this is likely to drive growth in property values. It says Lion Plaza will go up for sale in 2012, although this will subject to a shareholder vote.

Investing in a property that the fund has already bought may be more transparent than a fund that looks for opportunities after investors have piled in.

However, investing in a single property, rather than a range of properties in different regions and sectors, may put off some investors. Some advisers may also be concerned that the assumptions and forecasts upon which rental income calculations are made could be affected by market conditions that cannot be predicted at the time of investment.

Recommended

Halifax moves to help brokers assist clients buying houses in Spain

Halifax Intemediaries has launched a new section on its website to help brokers assist clients buying properties in Spain.The new web pages provide easy access to products and services from Banco Halifax Hispania, Halifax’s Spanish arm. Brokers are also able to download application forms and access soft copy Agreements in Principle which can be issued […]

Get a free ticket for our Mortgage debate

Money Marketing is hosting a Mortgage Market Question Time event next week in London in conjunction with Lansons Communications. An expert panel will discuss the current state of the mortgage market and the outlook for 2008.The panel includes mortgage gurus Stephen Knight (pictured near right), Nigel Stockton, Ray Boulger, Rob Clifford (pictured far right) and […]

Get your New Year off to a flying start

Ross Jackson, Senior Marketing Manager There’s no denying that these days we expect things quickly. You might have noticed it first-hand during the flurry and rush of the Christmas period. The fact is that in a world of smartphones, social media and click and collect, most clients expect to get an instant response and a […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment