Santander has become involved in the sale of The Capital building in Liverpool after a failed sales attempt by owner Starwood Capital, CoStar News understands.
Starwood instructed CBRE a year ago to sell the government-let office for around £90 million, a 7% net initial yield, as reported. However, the property failed to sell. The lender Santander has since stepped in to find a solution for the property. It has started talks on multiple fronts. It is in talks with the government as it is the main tenant on a 21-year lease. The building is one of three major processing hubs for UK visas and immigration. Talks focus on the government extending the lease across the whole building, thus providing a master lease, said a source familiar with the situation. Santander is also talking to potential buyers and lenders.
The US private equity firm bought the 377,551-square-foot building for £55 million for its Starwood Distressed Opportunity Fund IX in 2014. It was sold by Cerberus European Capital Advisors.
The property has had £25 million of capital expenditure spent on it in the last five years. Other tenants are Royal & Sun Alliance, NCP and Tesco with the Secretary of State accounting for 62% of the headline rent. The passing rent reflects £14.60 per square foot on the offices with headline rents in Liverpool at £29 per square foot.
The Capital Building occupies close to a 3.5 acre freehold site in the centre of Liverpool’s business district, overlooking the city’s waterfront. The building comprises around 425,000 square feet of predominantly office space, a 1,100 space car park and commercial retail spaces.
Santander declined to comment and Starwood did not respond to a request for comment by the time of publication.