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LONDON-Real estate fund manager Doughty Hanson & Co. Real Estate has acquired Howick Place, London SW1, in a joint venture with the listed property company Terrace Hill Group plc. The JV plans to redevelop the historic site with office and residential uses. The property was acquired from House of Fraser Stores Limited, which currently uses the property as their head office building.
Doughty Hanson & Co European Real Estate Fund II is investing US $48.87 million of equity in the investment. Kevin Grundy, head of the UK market for Doughty Hanson says the property is well located within the fast-growing Victoria office and residential market. Philip Leech, group managing director of Terrace Hill Group says the investment "should generate significant returns for the joint venture."
Indeed, a source associated with the JV tells GlobeSt.com that the value of the completed development will be US $349 million or about 28% more than its total expected investment. The JV paid approximately US $116 million for the property and plans to invest an additional US $155 million in the redevelopment, according to the source.
Howick Place was built in two phases, the first in 1894 and the second in 1912. The historic facades of both structures are expected to be retained and reused as part of the redevelopment. The residential component is slated for the yard space at the rear of the existing development, which backs up to Ashley Gardens. The existing buildings will be demolished in approximately 18 months; the new development is slated to open in 2010.
Terrace Hill Group PLC is an AIM-listed property group with a total development program of US $2.2 billion. Doughty Hanson & Co European Real Estate Fund II closed with commitments of US $767 million and has to date has committed about $192 million. The Fund's only other UK investment is the Kings Hill Business Park, held in joint venture with Liberty Property Trust.
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