Member Article

Downing loses control of The Capital in Liverpool

Merseyside property group Downing has lost control of one Liverpool’s largest office buildings to a US investment firm.

Downing acquired the 390,000 sq ft Capital building in Old Hall Street in 2006 for £51m from the Royal & Sun Alliance insurance company, in a deal financed by Lloyds.

The group then spent around £15m on refurbishments, and in 2010 the UK Border Agency agreed to lease 220,000 sq ft of office space.

Two years ago, Downing, which owns other commercial properties in the city and nationwide, put The Capital on the market for around £60m.

Investment house Cerberus Capital Management, which is based in New York, took control of the building as part of a debt portfolio sold by Lloyds Banking Group.

Downing had been seeking to buy the Capital building from Cerberus but negotiations failed.

In a statement, Downing said: “The group has reached the difficult decision to relinquish ownership of The Capital in Liverpool after more than seven years’ successful association with the building.

“The funder we originally worked with, Lloyds Banking Group, sold its interest in the building earlier this year as part of a wider £300m portfolio of properties removed from its loan book.

“At that time Downing made determined efforts to secure our future ownership of The Capital and understood we were the highest bidder in the process started by Lloyds Bank.

“Our bid proved unsuccessful because the bank would not sell the Capital as a stand-alone property but only as part of a wider portfolio of commercial buildings.

“In the event, Cerberus Capital Management acquired the debt on the building.

“We have been negotiating with Cerberus in recent months but unfortunately have been unable to agree a valuation. It is with regret, therefore, that we have decided to remove The Capital from our portfolio and future plans.”

Other tenants at The Capital include the economic development agency Liverpool Vision and Royal & Sun Alliance, now known as RSA.

This was posted in Bdaily's Members' News section by Simon Malia .