London & Stamford to buy HBOS properties

London & Stamford, the entrepreneurial property company, is to buy £215m ($328m) of properties from Warner Estates and Lloyds Banking Group in the latest in a growing line of former HBOS-backed real estate asset sales.

London & Stamford is to pay about £215m for the Radial distribution fund, a 50-50 venture between Warner and HBOS, a premium to the last reported value of £196m in 2009.

The purchase will effectively be priced at the level of the debt behind the portfolio, which means that HBOS will recoup its loan although the equity has been wiped out for both partners.

Lloyds has been liquidating many of the real estate investments made by Peter Cummings’ HBOS corporate division. Lloyds said on Tuesday that commercial property impairments continued at a high level but losses were past their peak.

Royal Bank of Scotland also lent to the fund and it will again receive its debt back. It is understood RBS has also sanctioned the sale. Warner, which borrowed from HBOS and RBS at a group level, has already been forced to refinance debt on directly owned assets. Warner is now trying to expand its business again after stabilising its balance sheet.

Radial was established in 2003 to invest in the UK distribution markets and was once expected to be grown to £1bn under plans outlined by Warner at the height of the boom. All parties declined to comment.

The deal appears to be good value for London & Stamford, which is being advised by Savills, with a yield of about 8 per cent. London & Stamford was the first Aim-quoted vulture fund to launch in the property crash when it started in 2007. It has an experienced management headed by Patrick Vaughan and Raymond Mould.

● Segro, the office and industrial property group, has completed the purchase of a stake in a £446.6m portfolio of industrial properties based around Heathrow airport.

Segro has agreed to buy BAA’s half interest in the Airport Property Partnership, a joint venture with Aviva Investors, for £111.3m in cash after months of discussions. The price implies a property valuation of £446.6m, and a net equivalent yield of 7.6 per cent.