Sky News – 11th December 2019
The Reuben brothers are on the brink of agreeing a £70m loan to one of London’s most iconic real estate projects, Sky News learns.
The billionaire brothers who have amassed one of Central London’s most valuable property portfolios are on the brink of a deal to fund the redevelopment of Admiralty Arch, one of the capital’s most iconic sites. Sky News has learnt that David and Simon Reuben are in talks about providing roughly £70m of debt to keep the Admiralty Arch project on track. Sources said on Wednesday that the Reubens has tabled a proposal in competition with a number of commercial lenders and specialist debt funds.
It remained possible that another offer could yet be chosen, but the Reubens’ deal is seen as the most likely, one added. If confirmed, the deal would hand a role in one of London’s most prestigious real estate projects to arguably the City’s most prolific property investors.
Admiralty Arch was sold four years ago to Rafael Serrano, a Spanish investor, whose Prime Investors Capital vehicle also owns the 5-star Bulgari Hotel in Knightsbridge, Central London. PIC now holds a 250-year lease on the Admiralty Arch property. The new loan being negotiated by Mr Serrano’s company is understood to be replacing a roughly £70m debt facility put in place by Sabadell, the Spanish bank which also owns the British high street lender TSB. One property investor said that the existing loan needed to be refinanced within a matter of weeks to avoid the development running into financial trouble.
The Admiralty Arch site is one of London’s best-known buildings, with views from some of the new hotel’s 96 rooms expected to stretch down The Mall to Buckingham Palace. Commissioned in memory of Queen Victoria, the arch was designed by Sir Aston Webb, who was also responsible for The Mall and the main facade at Buckingham Palace. Admiralty Arch has housed the official residences of the First Sea Lords as well as becoming a centre for clandestine wartime intelligence efforts and a Royal Navy outpost. More recently, it served as a base for the Cabinet Office.
The sale to Mr Serrano’s vehicle, originally agreed in 2012 as part of a drive by the government to sell non-core property assets, completed in 2015. Two years later, Waldorf Astoria, a subsidiary of the US hospitality giant Hilton Group, was appointed as the operator of the Admiralty Arch hotel. The redevelopment is scheduled to be completed in 2021, with the new hotel expected to open that year or in early 2022.
The Reubens are understood to be planning to finance the deal through RB Capital, one of their private investment vehicles. Estimated by this year’s Sunday Times Rich List to be worth more than £18.6bn, they have built a vast business empire comprising property assets, data centres, technology company stakes and interests in leisure and aviation. Among their investments are Arena Leisure, the racing group, the London Heliport in Battersea and a small shareholding in Metro Bank, the struggling high street lender. In real estate, the brothers own the In & Out Club and the Grade II-listed Burlington Arcade on Piccadilly, and the John Lewis Partnership’s head office near Victoria.
The terms of the Reuben brothers’ prospective loan to the Admiralty Arch redevelopment project were unclear on Wednesday. However, one source pointed out that they had bid to acquire the site when it was sold by the government in 2012, suggesting that they could seek to gain ownership of it in future.
Eastdil, the real estate-focused investment bank, accountancy firm EY and Freshfields Bruckhaus Deringer, the law firm, are all said to have roles advising parties on the refinancing process. A spokesman for the Reubens declined to comment, while none of the other participants could be reached.