Ronson’s resi mates

Developer’s Ronson Capital Partners forms debt club to fund luxury riverside residential scheme.

Gerald Ronson has assembled a group of high-profile backers to provide more than £230m of funding for his latest luxury residential scheme, on the north bank of the River Thames.

Property Week understands that Crosstree Real Estate has brokered an innovative financing arrangement with the property grandee’s Ronson Capital Partners to develop Riverwalk House on London’s Millbank, as investors and banks seek new entrees into London’s red-hot prime residential market.

Crosstree, which is backed by Swiss pharmaceuticals billionaire Ernesto Bertarelli, is thought to be supplying £30m of subordinated debt as part of the £230m package, which gives it a share of the profits on the scheme. Lloyds Banking Group and Barclays are providing senior debt, and talks are ongoing about junior debt.

City sources suggested that only a developer with Ronson’s track record would be able to pull together a nancing consortium of this kind.

Ronson bought the £70m property at 155-166 Millbank from Derwent London in September, and has since obtained consent to convert it into 121 flats across 17 floors. The nal value of the scheme is expected to exceed £350m, and Derwent will take a share in the profits. A new generation of investors, such as Crosstree, Wainbridge and Merrick Real Estate, are finding increasingly innovative ways to bridge the development funding gap.

The Riverwalk House debt agreement, thought to have been Crosstree’s brainchild, brings together an assortment of developers, investors and lenders, all hoping to cash in on unprecedented demand for high-end flats overlooking the Thames.

It is thought Lloyds and Barclays are jointly providing £120m-£125m in senior debt towards the scheme, constituting around 55% of the development cost.

Talks are also believed to be ongoing with a separate mezzanine lender for a further £25m-£30m, taking the debt to 65% of the overall cost. The fourth party would be Crosstree, as a subordinated lender providing around £30m towards development and, like Derwent, taking a share in profits. Crosstree’s profit share comes in return for being higher up the risk curve than the other financiers. Ronson Capital Partners, a £500m fund set up in April 2011 and backed by wealthy private investors, is likely to provide the remaining £50m-£80m that is required to develop the scheme.

The fund has received backing from several groups, predominantly wealthy families and Middle Eastern sovereign wealth funds, among them investors from Oman.

All parties declined to comment.

1 March 2013 | Nick Johnstone | Property Week