Baker & McKenzie is advising on the sale of the City’s landmark Gherkin building months after handling its collapse into receivership earlier in the year.
Baker & McKenzie’s global co-head of financial restructuring and insolvency Ian Jack and partner Louise Webb led the deal advising Deloitte, the receivers, as well as the agent for the banking syndicate which funded the original acquisition of the iconic building.
The St Mary Axe building, home to Kirkland & Ellis and Hunton & Williams, was put up for sale this morning (29 July) with a price tag of around £640m. The building has been dogged by continued defaults on its debts despite being almost fully rented, due to the weakening value of the pound against the Swiss franc.
Currency fluctuations have sent its obligations soaring since the financial crisis. Deloitte was called in by the five-bank senior lender syndicate after Evans Randall and German firm IVG failed to strike a restructuring deal over the debts.
At the time Neville Kahn, joint receiver and restructuring services partner at Deloitte commented: “The senior lenders were reluctant to appoint a receiver but felt they had no choice due to the ongoing defaults, which have remained uncured for over five years, and concerns that the borrowers’ lack of equity in the transaction had caused their incentives to become misaligned with the lenders’.”
The building was sold to IVG Immobilien and Evans Randall in 2007 for £600m from insurer Swiss Re (5 February 2007) but IVG filed for insolvency in 2013.
Savills and Deloitte Real Estate have been jointly instructed to sell the 505,000 sq ft landmark. Tenants pay an average rent of £55 per sq ft.
The London commercial property market has seen insatiable demand from overseas investors and a growing number of UK institutions on the back of the economic recovery. According to Savills, £71.1bn has been invested into the office and retail markets over the last five and a half years, with overseas investors accounting for £47.7bn.
The Gherkin is in the heart of the insurance district, which has seen a flurry of leasing activity led by insurers moving into new developments such as the Walkie Talkie. DWF will be the first law firm to move into the building when it shift its 305 London-based staff, including 53 partners, from its two current London sites into the building on 1 September (19 May 2014).