Cindat-CITIC Capital London JV Taken Over by Receivers

A stalled luxury apartment project in London’s prestigious Mayfair district which had been backed by Chinese real estate private equity firm Cindat Capital Management and CITIC Capital has gone into administration after defaulting on a loan from an Apollo Global Management fund.

Directors from restructuring firm Interpath Advisory have been appointed as fixed charge receivers for 60 Curzon Street, a 32-unit development which was estimated to be worth £600 million before construction delays and travel restrictions during the pandemic kept buyers away from the project.

London-based real estate investment and development firm Brockton Everlast (then known as Brockton Capital) in 2016 sold a roughly 70 percent stake in 60 Curzon Street to a joint venture between Beijing-based Cindat and state-owned CITIC Capital for a reported $155 million. Construction commenced shortly thereafter, with completion targeted for 2020.

Pandemic problems caused the partners to miss that construction deadline, and slower sales stretched their financing as well.

“The project didn’t finish until 2023, which technically put the project into default,” a Brockton Everlast spokesperson told Mingtiandi. “The reason it was slow in completing was due to physical distancing measures during the pandemic. With commercial projects, it was still possible to do elements of the construction, but with high-end residential projects, where people worked in much more confined spaces, the distancing rules massively impacted the project’s delivery programme.”

Cindat Capital and CITIC Capital had not responded to Mingtiandi inquiries by the time of publication, while Apollo declined to comment.

Posh Area

The directors from Interpath Advisory, who were named on 26 January, noted that the lender sought to bring in receivers to support ongoing sales of the project.

“With a number of units already sold, we expect this scheme to continue to generate significant interest from high-net-worth individuals who desire the perfect London base, coupled with best-in-class luxury living facilities,” said Steve Absolom, joint fixed charge receiver and head of real estate at Interpath Advisory.

Located steps from the Green Park Underground station and a 10-minute walk from Buckingham Palace, 60 Curzon has eight above-ground floors and five below-ground levels, with amenities including a 20-metre swimming pool, spa, gym and 24-hour concierge service.

The project offers units ranging from 441 square feet to 8,148 square feet with prices for  one-bedroom apartments starting at $4.45 million, according to media accounts.

The project has sold around £100 million in units in recent months, with buyers mostly originating from the UK, North America, Europe and the Middle East, Brockton’s spokesperson told Mingtiandi.

Originally backed by senior bank loans from Deutsche Bank, Bank of China and Singapore’s United Overseas Bank, along with an Apollo-managed mezzanine tranche, the asset was refinanced roughly four years ago with the banks exiting and Apollo taking over as the project’s sole lender, according to market sources who spoke with Mingitanid.

Cross-Border Blues

The project, which was Cindat’s first investment in London, is the latest in a series of challenges for the fund manager which was founded in 2013 by former Merrill Lynch bankers Greg Peng and Erh-Fei Liu to invest in global real estate assets on behalf of mainland institutional and private investors.

The fund manager has recently been stung by the US office market slump, with occupancy at its 65-storey Chicago office tower on 311 South Wacker Drive plunging below 50 percent following the exit of three major tenants last month. After acquiring the building for $302 million in 2014, Cindat and its joint venture partner Zeller Realty reportedly received offers of $100 million to $120 million since putting the tower up for sale in December 2022.

In 2021, US-based Mack Real Estate foreclosed on a portfolio of seven distressed Manhattan hotels which had previously been jointly owned by Cindat and Hersha Hospitality Trust after the Chinese firm in 2016 had paid $571 million to acquire a 70 percent stake in the set of properties from the NYSE-listed REIT.

The foreclosure sale came after the Cindat-Hersha JV defaulted on a $85 million mezzanine loan from Mack in 2018, with the 2021 price for the 1,087-key portfolio reported to be less than 40 percent of the value used in Cindat’s 2016 investment. By the third quarter of 2020, Hersha had written down the value of its 30 percent stake in the venture to zero.

Also in 2021, a joint venture between Cindat and London-based real estate investment firm Aprirose completed a debt restructuring for QHotels, a portfolio of 20 four and five-star regional UK hotels that the partners had acquired from Bain Capital and Canyon Partners for £525 million in 2017.

In 2019, Cindat was among a group of borrowers that defaulted on a $195 million loan on 125 Greenwich Street, an 88-storey luxury condo project in Manhattan which only resumed construction in July 2023 following a prolonged pause.

Cindat’s other investments include a majority stake in a portfolio of 67 UK senior housing properties as well as a portfolio of US senior housing and long-term care facilities, which it had acquired together with Chinese insurer Union Life for $930 million in 2016.

The fund manager in 2019 also teamed up with Oaktree Capital and Quadrant Estates to acquire 30 South Colonnade (then known as the Thomson Reuters Building) in London’s Canary Wharf area from China’s HNA Group.