Second closing on the cards for Henderson CLOF 2 fund

Central London Fund 2 has invested £90m raised at first close last year

Henderson Global Investors hopes to hold a second closing by September for Central London Fund 2, after investing all its initial capital. CLOF 2 has spent £90m of equity raised a year ago from four UK and European institutions, and Canadian pension fund the Alberta Investment Management Corporation (AIMCo). Nick Deacon, fund manager in Henderson’s central London team, said CLOF 2 was about to buy 7 Bishopsgate, EC2, which is vacant after tenant McDermott Will & Emery moved up the street to become the first office tenant in the Heron Tower.

Deacon said Henderson would refurbish the late 1990s building for reletting next year “to try and take advantage of this development cycle”. CLOF 2’s other deal is for the Leadenhall Triangle site, which it is investing in with two other Henderson clients: CLOF 1 and AIMCo. CLOF 2 has paid one third of the price of around £190m to the administrator to Investream clients.

Deacon said Henderson would look to refinance the five buildings on the Leadenhall site. “Our focus is refurbishment. We are not ruling out development, but not before 2015-16.” Clive Castle, director of Henderson’s central London team, said the team has bought and sold £300m of property in the past 12 months, taking profits from West End assets and rebalancing towards the City and Kings Cross.

As well as selling CLOF 1’s 50% stake in Belgrave House, SW1 to TIAA-CREF for £108m in February, the team sold a building in Mayfair’s North Row to an overseas buyer for about £23m. It was vacant after tenant Fladgate moved to Henderson’s refurbished, 42,500 sq ft New Brook Buildings. CLOF 1 also swapped a Covent Garden building for another City refurbishment opportunity, Bishops Court, with Royal London Asset Management.

CLOF 1’s wind-down period  has been extended by two years to better maximise returns. The fund has agreed to provide Istithmar P&O Estates with £52m over three years to develop the final phase of Regent Quarter at Kings Cross, with an estimated end value of £70m. Warburg-Henderson KAG has raised €130m of equity and debt for a second core fund to buy Austrian retail and office property. It is targeting returns of 7%, marginally above the 6% achieved by its first fund. Austrian insurer Wiener Städtlische Versicherung will asset manage the portfolio with Henderson.