Drapers Gardens, a newly built City office building bought last year for £240m by Evans Randall, has some 10 ultra wealthy private investors co-investing in the deal. Set up in 1993, Evans Randall structures real estate finance and invests directly. Some wealthy private investors or their representatives come to Evans Randall directly, while others come via private banks. The group has special relationships with a handful of these.
Typically, Evans Randall’s ultra high net worth investors co-invest with them over a period of time, putting a “few million upwards” into larger deals. “Ultra high net worth investors will have more than one private bank and want to see private bankers add value,” says Kent Gardner, Evans Randall’s chief executive. “Private banks want to offer their high net worth investors something different, more bespoke. Our core expertise is in offices and we’ve normally gone for big lot, single let buildings.”
Drapers Gardens is just such a deal. The building is let to BlackRock on a 25-year lease and Evans Randall bought it at the fitting-out stage. “We normally structure investments on a deal-by-deal basis,” says Gardner. “We are able to put co-investors together in the same transactions where they may be participating in different ways.” For example, with Milton Gate, another City office building bought with Al Salam Bank Bahrain for £127m in 2009, Evans Randall structured a £40m, Shariah-compliant tranche to provide a high current yield but more limited upside for the bank’s clients.
“It had co-investors sitting behind them and taking more of the equity upside,” says Gardner. Evans Randall has also teamed up with London luxury residential developer Northacre to raise debt and provide equity on a project-by-project basis. “That would be in terms of investing in a development, though we haven’t been able to identify any substantial development transactions recently,” says Gardner. “There’s a synergy between our investor base and their desire to access quality residential in London.”