Malaysians agree £2bn tie-up with Ballymore

Deal would result in major NAMA repayment

Irish developer Ballymore is in exclusive talks to form a joint venture with a Malaysian investor to develop £2bn of London residential projects, Real Estate Capital can reveal.

Sean Mulryan croppedEco World Development has agreed to set up a joint venture with Ballymore, the company headed by Sean Mulryan (pictured), and retain Ballymore as development manager on the three schemes. The projects are Arrowhead Quay in Canary Wharf, the second phase of London City Island in the Lea Valley also in east London and the second phase of Embassy Gardens in Battersea, south London.

The schemes will total 3,000 units and 250,000 sq ft of leisure and office space. All three sites have planning consent and development is expected to begin on all of them early next year.

Mulryan was one of NAMA’s top 10 borrowers when the agency was formed in 2009. Since then Ballymore has been steadily selling off elements of its portfolio in order to pay back the “bad bank” and this deal will result in one of its largest repayments yet – it is thought that the three sites are valued at around £450m.

The deal also illustrates the insatiable appetite for investment into the London residential sector from overseas and in particular Far Eastern investors.

Eco World Development, based in Selangor Darul Ehsan, has close ties to SP Setia, the company that led the purchase and ongoing redevelopment of Battersea Power Station. The former president and chief executive of SP Setia, Tan Sri Liew Kee Sin, is a non-executive director of Eco World and his son Tian Xiong is a major shareholder. Tan Sri Liew Kee Sin remains the chairman of the Battersea project, despite having left SP Setia in April. Many other former high level directors of SP Setia are amongst Eco World’s top brass.

The company currently only has projects in Malaysia but its website says “EcoWorld is one of Malaysia’s fastest rising stars in property development with the brand reaching out to international shores very soon”.

The deal, codenamed Project Ace, kicked off in May when Lazard and CBRE were appointed to find a partner for Ballymore. It is understood that CBRE has been leading on finding prospective development finance for the project and that this process is still ongoing.

Since NAMA and Ballymore agreed a seven-year business plan to pay back the company’s £1.1bn of debt in 2011 it has sold the likes of Old Spitalfields Market in the City of London in May last year for £105m to Ashkenazy Acquisition Corporation and Royal Wharf to Singaporean Oxley Holdings in November last year for £200m.

Earlier this morning another major residential development deal was announced. Guggenheim Partners-backed Cain Hoy and Galliard Homes have agreed to form a new £225m, 50:50 joint venture to invest in the South East over the next three years. The duo aims to create assets with a combined end value of £1bn and its first project will be the 900-unit 2 Millharbour scheme in Canary Wharf in joint venture with Frogmore. Deutsche Bank has agreed to provide a three-year corporate facility to Galliard Holdings “that will be used towards the Galliard share of the equity funding for the new joint venture”.

 

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