Published On: Mon, Oct 7th, 2013

Gerald Ronson Saves London Heron Tower With $629 Million Refinancing : Starwood Capital Chips In $467 Million

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Gerald Ronson / Getty

UK Property tycoon Gerald Ronson’s landmark new office development in London, Heron Tower, located close to St. Paul’s Cathedral, has finally been refinanced to the tune of GB £388 million (about US$629 million) by an infusion of GB £288 million (about US$467 million) from Barry Sternlicht’s US private equity group Starwood Capital plus a further GB £100 million (US$162 million) from its existing equity owners.

398px-Heron_Tower,   _Bishopsgate,   _London

 Heron Tower / Wikipedia

The 46 storey building was completed only in 2011 and is the third largest office tower in London. The aquarium in its lobby has over 1, 200 fish in it.

The building is owned by a trust in which Gerald Ronson’s Heron International participates together with the Oman Sovereign Wealth Fund and wealthy Saudi investors.

While the building is in principle a hugely valuable property for the long-term, it seems some serious behind the scenes shareholder squabbling had recently got in the way of an orderly refinancing of its existing, most likely non-recourse, bank loans. Originally provided by German banking group these had been taken over by a group led by Wells Fargo Bank.

Earlier this year the loans appear became accelerated for violation of a minimum leasing covenant, as a result of the building’s poor level of leasing performance. At just 60%, this arose out of the financial industry recession, caused by the 2008 crisis, just as the newly-completed building was coming on stream.

Starwood European Real Estate Finance, a London Exchange-listed Starwood Capital business, has said it is providing GB£18 million (US$29 million) as its participation in a new 5-year loan facility, with another Starwood unit, Starwood Property Trust providing the remaining GB£270 million (about US$438 million) of Starwood’s total participation.

London has experienced a tough office leasing market since the financial crash with many companies forced to stay where they are or even to consolidate in smaller space, rather than sign-up for new buildings, and particularly so in the financial district.

The Heron Tower will nevertheless be fine once the market stabilizes as it remains the only new premium quality building to have come on stream since the crash. Clearly Barry Sternlicht shares this opinion too.

heron_tower Reception

Heron Tower Reception

About Gerald Ronson

Gerald Ronson, 74, is today one of the UK’s most successful businessmen and respected property developers of his generation.

He started working for his father at the age of 15, joining Heron Homes, which became one of the biggest house builders in Southern England. In 1956, at the age of 17, Gerald founded Heron Group – now called Heron International – of which he is Chief Executive.

Gerald Ronson is also a major philanthropist, having helped to raise over GB£100 million (US$162 million) for which he received a CBE last year. He has donated himself more than GB£30 million (US$48 million) to a variety of charities. He has also established The Gerald Ronson Foundation, whose purpose is to carry on his charitable work and to which he has bequeathed all his shares in Heron International.

 

About Heron International

Gerald Ronson has been developing property since the 1960’s and has been a pioneer in the sector within the UK and European property markets. As a result Heron International became the second largest private company in Britain and has to date developed 160 buildings in nine countries, 10 million square feet of commercial and retail property and over 15, 000 residential units in the UK, US and continental Europe.

In London, recent developments include Heron Tower, the 46-storey office building in the City of London completed in March 2011 which offers flexible and sustainable world class office space; and The Heron, a development of 285 luxury apartments above new facilities for the Guildhall School of Music & Drama.

Heron International was also one of the earliest to introduce self-service petrol stations in the UK and, since 1966, has built nearly a thousand of them all across the country.

 

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