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Arsenal accepts lowball offer for vacant Highbury Square flats
Acquisitive real estate group London & Stamford Property has put its core strategy aside to acquire almost 150 flats for a knock-down price from debt-laden Arsenal Football Club's Highbury Square development.
The club, which has been in refinancing negotiations with its banking syndicate since late last year, has offloaded the flats in the North Stand of its former stadium at a discount to market value of almost 20pc, according to analysts.
London & Stamford, which had previously only invested in commercial property with long-term tenants, stepped in with a cut-price offer after another investor abandoned plans to buy the apartments.
Malaysian group Fraser & Neave is understood to have earlier agreed to buy 120 apartments for £47m and had already paid a 10pc deposit before issuing a profits warning earlier this year. London & Stamford, which is based in Guernsey and led by Raymond Mould and Patrick Vaughan, has paid £41.4m for 142 one and two-bedroom flats, four three-bedroom flats and 98 parking bays.
Arsenal took on debts of more than £130m to fund the conversion of its former home ground into a residential development but came under pressure as buyers that had paid deposits delayed or failed to complete purchases.
The club still had £123.6m of debt on the development at the end of the financial year to May, though the sum has since been cut to £47.1m following a series of sales.
Analysts at KBC Peel Hunt, broker and adviser to London & Stamford, said that "even today" the market value of the flats acquired by the property group was about £500 per square foot. That compared with a purchase cost for London & Stamford of about £400. The company intends to let out the flats, which are all vacant, over the coming year and sell them over the longer term.
Arsenal said on Monday it had refinanced the remainder of the debt on the Highbury Square development, with the repayment date pushed back eight months from next April to December next year.
London & Stamford, which has now made six investments totalling £190m, entered the property market with a mountain of cash after raising £247.5m when it listed on Aim late in 2007. It raised a further £225.8m in a placing and open offer midway through this year.