Barings refinances London’s Café Royal with £165m loan

The private lender has provided a 47% LTV debt facility in a ‘rare’ financing opportunity, as it targets alternative sectors across the UK.

Barings Real Estate has written a £165 million (€185 million) loan secured against the Hotel Café Royal, the 150-year-old, five-star hotel in London’s West End.

The seven-year, fixed-rate, first-mortgage loan is secured against the 159-room hotel and includes 16,000 square feet of retail space on the ground floor, which fronts Regent Street and is let to Nespresso, Lotus and Wolford. The loan, which represents a 47 percent loan-to-value ratio, will be used to refinance existing debt.

“This is a rare opportunity to provide financing for one of London’s most iconic hotels, which attracts growing numbers of tourists visiting from across the globe,” said Chris Bates, Barings’ head of real estate core mortgage Europe.

“This transaction demonstrates Barings’ continued appetite for significant debt financings in the alternative sectors of the UK real estate market, as the team focuses on growing the platform,” he added.

The private debt provider, which lends on behalf of a segregated mandate from its US parent, MassMutual, has underwritten loans over the past 12 months across the capital stack including senior debt, development financing and whole loans. It has backed a range of traditional and alternative real estate sectors, including student housing and the private rented residential sector.

In May last year, it financed Corestate’s UK debut, with a circa £30 million loan to finance the purchase of the historic Royal Liver Building in Liverpool. In December 2016, it completed a £40 million extension to an existing £80 million loan to Empiric Student Property, secured by a portfolio of 25 operating assets.

Meanwhile, Barings has hired Daniel Köhler from Invesco Real Estate as director of debt capital markets, structured real estate investments in Europe. Köhler, who is based in Munich, will source debt to support Barings’ European real estate investment activities, reporting to US-based head of debt capital markets, Nasir Alamgir.