Westbrook is in advanced talks with the AXA investments group for the sale of Dolphin Square at a figure of £850 million, according to the online trade publication, Serviced Apartment News.
The report claims that other buyers are interested in the property and that Westbrook is also considering refinancing their loans on the property which amount to more than £500 million.
The loans were provided by M&G Group and MetLife of New York in March of 2015 when a valuation of £850 million was placed on the property by the leading estate agents and valuers, Knight Frank.
At the time, it was reported that the loan required a loan to capital value ratio of 65% meaning that the loan achieved was nearly the maximum possible. Since 2015, central London property values have fallen by more than 20% which implies that the lenders will require at least £150 million more additional security to support their loans.
Another problem for Westbrook with their Dolphin Square investment has been the collapse of short-term holiday lettings caused by the coronavirus. The latest accounts of their management company, Dolphin Square Limited, are overdue and the last published account showed a balance sheet asset deficiency of nearly £50 million with the lenders having a first charge over the company's shares.
Property professionals questioned the valuation at the time the loan was granted in the light of valuations put on the property in High Court proceedings instituted by Westbrook for enfranchisement of the freehold.
As a result of the valuations, Westbrook paid the freeholder, Friends Provident around £190 million for the freehold having originally purchased a lease on the property for a similar amount 10 years previously. At the time of the purchase, the "marriage value" between the two interests was held by the court to be around £400 million causing surprise that Westbrook was able to obtain loans totalling more than £500 million.
If the sale goes ahead, it is not clear what will happen to the planning appeal scheduled to take place in September against the refusal of planning permission for Westbrook's plans to add another 250 flats on the site, including a big increase in the number of short-term serviced apartments for hotel letting.
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