£89m LaSalle development loan under review after site changes hands

An £89m financing won by LaSalle Investment Management last year may come back to market after the £200m London development scheme it was secured on changed hands.

City North Finsbury Park is one of four London projects which Telford Homes acquired after its £23m purchase in the last few weeks of the regeneration business of the original developer, United House Developments (UHD).

LaSalle Residential Finance (LRF) agreed an £89m debt package with UHD to fund City North in June last year and was expecting it to be drawn down in stages as the north London scheme was developed. It is understood the amount drawn down to date is not significant.

Now, Telford’s acquisition has thrown doubt on whether LaSalle’s facility will be kept in place.

“We’re going to talk to LaSalle but that finance won’t necessarily be the finance we take forward on the scheme,” said Jon Di-Stefano, chief executive of Telford Homes. “But because they’ve been involved they’ll be one of the first parties we’ll talk to because they have a lot of knowledge about the scheme.”

Telford has its own group of relationship lenders including the Royal Bank of Scotland, HSBC, Santander and Allied Irish. Those banks provided a £180m refinancing loan to Telford in March this year, arranged by RBS.

“That doesn’t mean they’ll be the only banks we use,” said Di-Stefano. “We’re open-minded from that point of view. We’ll be looking for the most appropriate deal that we can source, as would be normally the case.”

The £89m investment was the sixth for the LRF fund, which had then deployed about £300m of its £440m capital. The loan-to-cost on the overall debt package was understood to be under the fund’s 75% ceiling and below the top gross development value of 65% for the residential element which represents a majority of the project’s £200m overall value.

The return of a significant amount of the sizeable loan more than year after the capital was deployed would be a disappointment for the lender.

A spokesman for LaSalle said the firm “remained committed to financing the scheme”.