Milton Gate, City of London

Milton Gate is a landmark building in core City of London location, occupying an island site within the immediate vicinity of City Point, One London Wall and the newly developed Ropemaker Place offices.  A comprehensive refurbishment was completed in 2007 and the tenant, Addleshaw Goddard LLP, completed exceptional fitting out works in order to occupy the space as their flagship headquarters.  At the time of acquisition the lease had an unexpired term of over 14 years.

Evans Randall acquired Milton Gate in June 2009 for £127 million, representing a net initial yield of approximately 7.5%.  The deal was transacted off-market and completed in extremely aggressive three week timeframe.

The acquisition was funded by way of an innovative financing structure.  Senior debt was arranged with Santander and DG Hyp in a club deal.  Further financing was arranged with Al Salam Bank Bahrain by way of a Sharia compliant commodity murabaha arrangement.  Evans Randall also arranged equity bridge financing, which was quickly refinanced through an extremely successful equity placement.

The transaction required total equity of approximately £25 million, which was approximately 50% oversubscribed.  The equity was segmented into two tranches to provide attractive opportunities for investors from either a cash on cash or tax planning perspective (the cash element provided a 10% annual cash return).

The acquisition marked the bottom of the prime City office investment downturn, achieving extremely attractive yield of 7.5%.  The exit in June 2010 at a yield of 6% provided equity investors with average IRRs of approximately 60%.