Deals and loans stretching back decades lie behind the ‘for sale’ notice on London’s most expensive home.
When Saudi Prince Khaled bin Sultan al-Saud went shopping for a private jet in 2016, his Swiss wealth advisers pulled together a list of assets to secure financing that included the crown jewel of his family fortune — a 40-room mansion they described as the “London Palace”.
That 205-year-old house in Regent’s Park, also known as The Holme, is now up for sale for £250 million (NZ$483.9m) after a company managed by London hedge fund Attestor appointed receivers for the property following the expiry of a loan secured against it.
The sale, which would be London’s most expensive residential deal on record, has opened a rare window into the normally discreet top end of the British property market.
It also shines a spotlight on the decades-long love affair between Saudi money and the UK capital, as well as the financial pressure on senior members of the Saudi royal family after Crown Prince Mohammed bin Salman sought to rein in lavish state spending on princes and marginalise those not closest to him.
One London luxury property agent said the public attention resulting from the sale violated the “first rule” of ultra-high-end transactions. “There is practically a ‘For Sale’ sign in front of it — it’s not a good start,” the agent said, adding that with a typical deal of this type, “nobody knows that it’s sold, nobody knows that it’s available, nobody knows the price”.
A person familiar with Saudi royal finances said princes who splashed out on London residences in the past now faced tighter finances at home and increasing scrutiny in the UK.
“[There is] less cash to go around. If you have assets in London, yeah, they have to be sold,” the person said.
Described by the agent as a “mini-Buckingham Palace”, The Holme sits on a four-acre plot and is one of a handful of residences inside the boundary of Regent’s Park. Prince Khaled spent US$43m to acquire a long lease on the white-stucco mansion in 1991 via Guernsey-registered Quendon Limited.
A lawsuit brought by a second lender sheds light on a series of deals and loans stretching back decades that led to the mansion being put up for sale. Court records, along with people familiar with the situation, reveal how leading banks, law firms and hedge funds served the prince’s financial needs and smoothed his entry into the top of the London housing market.
The case has been brought by Yuntian 10 Leasing Company, an Irish subsidiary of China Minsheng Bank that leased Prince Khaled his private jet via a Bermuda company.
It claims the prince, who transferred Quendon the cash to buy the house, has retained a beneficial ownership interest in The Holme, so the property can be used to collect unpaid lease payments on the jet. The lawsuit claims Quendon was used to “conceal” Prince Khaled’s “ongoing beneficial ownership and control of the property”.
The prince “has represented to third parties... that he is the owner of the property... whilst simultaneously asserting when convenient to him that, as a result of the interposition of the said offshore trust and corporate structure, he has no interest whatsoever in the property”, lawyers for Yuntian wrote. Yuntian declined to comment.
The use of overseas companies to own London property has come under intense scrutiny since Russia’s invasion of Ukraine last year triggered sanctions against wealthy Russians’ UK assets.
Politicians including London mayor Sadiq Khan have called for tougher action to make ownership more transparent. The government has brought in measures to require foreign companies that own UK property to declare their beneficial owners.
Quendon lists five of Prince Khaled’s children as beneficial owners in Companies House.
In court papers, Quendon denies that Prince Khaled himself has an interest in the house or that Yuntian can target the property to recover his debts.
It said law firm Linklaters drafted a memo in 1991 specifying that the money Prince Khaled sent to Quendon to buy the house was a “gift” and gave advice on how to acquire and hold the house through a “lawful” and “tax-efficient method by which [Prince Khaled] and his family could enjoy the continued use and benefit of the property”.
The house was owned via a Guernsey trust set up by the Royal Bank of Canada’s Channel Islands trust arm, Quendon said in court filings. RBC and Linklaters declined to comment.
Prince Khaled is a Sandhurst-trained general who was Saudi Arabia’s deputy defence minister for three years.
Now aged 73, he has used The Holme as his London residence, Quendon acknowledged, and the company has also borrowed against the value of the house and used the money to fund loans to the prince and family members.
Some of the loans were backed by a personal guarantee from the prince. He guaranteed two loans, totalling £68m, made by Standard Chartered to Quendon starting in 2016. Quendon used the funds to repay a £13.9m loan from Citibank, make investments including a £36m portfolio managed by Standard Chartered and provide a £15m loan to Prince Khaled.
Standard Chartered and Citi declined to comment.
The year 2017 marked a big change in the finances of Saudi royals, as Prince Mohammed became the kingdom’s de facto ruler and launched a purported crackdown on corruption against members of the royal family, businessmen, state officials and others.
The crackdown led to the detention of about 300 businessmen, former state officials, princes and others, although Prince Khaled was not among them.
While the government said it had retrieved US$100 billion in ill-gotten gains, critics said it was partly a power play aimed at sidelining an influential elite that could pose a challenge to the ascendant crown prince.
An adviser to Saudi royalty said Prince Khaled “was in a very good position” financially after the 2011 death of his father Sultan bin Abdulaziz al-Saud, a son of the kingdom’s founder Ibn Saud, receiving the “lion’s share” of the inheritance.
These guys have serious problems.
However, “his financial circumstances changed massively” around 2017, the adviser said. The prince had since sold two yachts, according to people familiar with the vessels’ sale, and an US$87m Paris residence, according to the Wall Street Journal.
Quendon has borrowed more and more heavily against the house in recent years. It repaid the Standard Chartered loan with a new loan secured in 2019 from Trinity Investments, an Irish company managed by Attestor.
While the hedge fund is best known for betting on the debt of distressed companies — for example, buying up Wirecard bonds at deep discounts after the payment company’s collapse — it has also extended financing to property investors that would struggle to borrow from banks.
Attestor previously sued the Argentine government as part of a long-running skirmish between the South American country and its bondholders, while it also privately funds litigation claims on behalf of third parties.
The money from Trinity allowed Quendon to extend its lease on The Holme and make more loans to Prince Khaled, Quendon said in court papers.
The loan was extended three times in 2020, Yuntian claims, and is now worth about £150m, according to two people with knowledge of the situation.
Quendon said it was due to negotiate a refinancing of the loan with Trinity but the deal had been blocked because Yuntian had secured an interim charging order over the property from the High Court.
Trinity denies that Yuntian has a claim over the property but said Quendon had “failed to repay” its loans after they fell due.
Attestor declined to comment.
In August last year, Trinity secured the appointment of FRP Advisory as receivers for the property, which has now triggered a sale and appointed Knight Frank and Beauchamp Estates to market the mansion. FRP, Knight Frank and Beauchamp declined to comment.
According to the royal adviser, the sales process is just one public sign of the financial pinch facing members of the Saudi ruling family. “These are just iterations of the situation,” the person said. “These guys have serious problems.”
Written by: Joshua Oliver, George Hammond, Samer Al-Atrush and Robert Smith
© Financial Times