London development offers 'free-hold units

Real Estate Weekly, May 19, 1993 by Therese Fitzgerald

Want to buy a piece of London? The developers of Kensington Green, a new townhouse and apartment community in London's up-scale and convenient-to-all borough of Kensington, believe you do.

While the majority of the property in the United Kingdom, dating to back to feudal times, is under leasehold, The Taylor Woodrow Property Co. Inc., in partnership with Mitsui, are offering the townhouses "free-hold" or out-right. They can do so because they purchased the five acres on which Kensington Green sits -- the former site of St. Mary Abbots Hospital. British law prohibits them to sell the apartments out-right, but those units carry 999-year leases.

"We perceived right from the beginning the market for our particular product was international," said Barry A. Judd, Taylor Woodrow Property Co. Ltd.

Located two miles from Kensington Palace and Hyde Park, the $150 million project features Georgian-style townhouses and contemporary apartments and penthouses. Holders of the 999-year apartment leases get a share in the management company.

"You're effectively a shareholder in your own free-hold," said Judd.

The complex has already attracted tenants and purchasers from the United States, Europe, the Far East and Africa. A number of major American corporations, including Morgan Stanley, NYNEX, Kodak, Bankers Trust, Proctor & Gamble, Gillette and Citicorp, have taken two- to three-year leases on the apartments.

Now, prompted by the relative strength of the dollar against the devalued pound, Taylor Woodrow has named New York-based J can Marc Lever & Partners exclusive representative in the United States. This follows a marketing push in the Far East.

"Because our market was rather depressed we decided it was not the right time to present it," said Susan Merdinger, president and managing partner, Jean Marc Levet & Partners, an international real estate marketing company.

Merdinger said she will be marketing three options: Ownership to individuals

The units will also attract internationals, Merdinger said, because London is a base for doing business in Europe, and internationals, she said, prefer to buy new construction.

"When you have a 400-year-old townhouse, you have a lot of problems," she said.

In addition to the investment benefits, Merdinger said, the units feature American-style kitchens and bathrooms.

"Some Americans are miserable in the U.K, particularly London, because they don't find the modern conveniences," she said.

Parking and security, concerns of most urban dwellers, are also provided.

Judd said they are often asked where Taylor Woodrow got the confidence to begin a speculative development project in 1990 when both England and the United States were firmly entrenched in a recession. His answer, he said, is simple: "Location."

In the United Kingdom, Taylor Woodrow is a major owner and developer of commercial and residential property and infrastructure, including the tunnel linking England to France. In Canada, they have a $130 mill ion investment portfolio and they are major developers of residential property in California, Nevada. and Florida. who want to live in London full or part-time, investment with a tenant or leasing to corporations. A number of the apartments occupied by corporations have been sold to a Singapore investor, she said, and there is interest in another.

"They make a very valuable investment because of the tenants," she said.

When built-out, the project will total 165 units. According to Mungo Tennant, director of Marketing, Taylor Woodrow, of the 135 units completed, 91 have been sold or let. The units range from $180,000 for a studio to $2 million for a six-bedroom townhouse.