In their biggest scoop of the year, and proving once again why they are the best finance journalists in the business, the Tyler Durden team at ZH has completed a detailed investigation and uncovered The Morgue’s secret gold & silver vault in London.
The apparent top-secret (well, until today) location of JP Morgan’s gold vault is 60 Victoria Embankment, London, which just so happened to be the City of London School from 1879 to 1986, and which JP Morgan has leased since 1991.
It was known that JPM’s gold vaulting service was based on London, but the location was kept top-secret:
And speaking of JP Morgan, incidentally the subject of this post, what do we know about their London-based gold vault services? Once again, in their words:
J.P. Morgan recently integrated its gold vaulting service in London with its tri-party collateral agency service.
- J.P. Morgan operates one of the two largest commercial gold vaults in London (one of only six in the City) and is a member of the London gold clearing system.
- J.P. Morgan is also one of the few truly global providers of collateral management services. As collateral agent, J.P. Morgan works with two parties that have an established collateralized lending or financing arrangement.
ZH discovered the 60 Victoria Embankment, London address via a gold trade ticket issued by the Perth Mint in Australia:
We were quite stunned to find, in the deep recesses of the internet (and hosted by the Indonesian stock exchange of all place), a trade ticket from May 26, 2011, issued by the Perth Mint of Australia to Avocet Gold Mining (a West African gold miner), in which the Mint confirms its purchase of 2,126 ounces of gold at a price of $1,526 for a total transaction price of $3.246 million.
The facade of the old School of London, JPM gold vault:
ZH then details an exhaustive investigation into JPM’s history with the building, including its willingness to pay double the market value for the building when the Carlyle Group (of George Bush fame) put the building up for sale several years back- doubling the Carlyle Group’s investment in only a few months:
A cursory media search about the otherwise very nondescript looking building at 60 Victoria reveals that it had been fully leased by JP Morgan as long ago as 1991. What is more interesting, is that the property had previously been bundled as part of a high-profile commercial mortgage-backed securities, or CMBS, deal called White Tower 2006-3. The deal consolidated properties formerly owned by one-time London real estate mogul, Simon Halabi, one of the financial crisis most notable falls from Grace, who had an estimated net worth of $4.3 billion in 2007, and in April 2010 was declared bankrupt, and whose current whereabouts have since been unknown.
White Tower 2006-3, most infamous for being the first CMBS deal to be placed in liquidation after the start of the currency crisis, held a variety of properties near and dear to JPMorgan’s heart, first and foremost 60 Victoria Embankment, the 420,000 sq ft of office buildings fully let to JP Morgan Chase; but notably Alban Gate, the 382,000 sq ft office property located on London Wall
in the heart of the City and fully let to JP Morgan Chase. The latter also was JPM’s UK headquarters until last year.
What happened next is interesting: in July 2010 Carlyle bought the bulk of the “White Tower” asset portfolio from the defunct CMBS, paying some £173 million for the 60 Victoria Embankment location. Three very short months later, none other than long-time 60 Victoria resident JPMorgan bought the very same building from Carlyle for a whopping £350 million: a transaction which doubled Carlyle’s money in an unprecedented three months! At the time the now former CEO of JPM’s investment bank Jes Staley (and who currently works for BlueMountain – the same fund that made a killing by squeezing none other than JPMorgan’s London Whale traders), said, “These properties are long-term investments and represent our continued commitment to London as one of the world’s most important financial centres.” Frank Bisignano, chief administrative officer, added: “These properties are among the most attractive pieces of real estate in London. These buildings ensure that our employees will have the necessary technology, infrastructure and amenities to take our businesses forward.” Curiously, JPM showed zero love for its Alban Gate location, which it promptly departed to go to its new Canary Wharf HQ, and Carlyle was forced to pull the sale of this property a year later as it did not get enough satisfactory bids.
A pressing question remains: why did JPM, a long-time tenant of 60 Victoria not submit its own bid for the location it knew it would end up purchasing outright in a few months from Carlyle anyway? Why overpay by £177 million in exchange for merely having one more middleman do a three-month transaction? We hope to find out.
Yet what is very clear is that there was something of far greater value to JPM at the 60 Victoria location than at its old headquarters.
Finally, Google street view seems to confirm that 60 Victoria Embankment, London is in fact a vault location: