Lodha Group has secured development finance for one of its two flagship London residential projects with alternative lender Cain Hoy Enterprises.
Cain Hoy is providing a £78 million bespoke finance package for development of Lincoln Square, the recently renamed New Court, 48 Carey Street, WC2 which is to be redeveloped as 202 apartments.
The new loan refinances the site acquisition finance, which Real Estate Capital understands was a senior loan from pbb Deutsche Pfandbriefbank and mezzanine from Apollo. Lodha acquired the Midtown site, which is next to the London School of Economics, Lincoln’s Inn and the Royal Courts of Justice, in early 2014 for £90 million from WELPUT, winning planning consent and then appointing Brookfield Multiplex as contractor in 2015.
It is believed that pbb did not want to lend on the development. Like a number of other lenders since the central London market began to soften 12-18 months ago, the German bank remains very cautious about providing debt for residential projects in the capital which are being marketed at sales prices at higher than £1,000 per sq ft.
Before sourcing finance with Cain Hoy, Lodha is believed to have held discussions with Lloyds and RBS about financing the scheme, but neither bank followed through.
Lodha is pricing the Lincoln Square flats at just over £2,000 per square foot and has sold about 30 in the first phase at this price point ranging from studios to three-beds.
The deal is the first for Lodha’s new director of finance, Ab Shome, who joined in August from Lloyds bank where he was a director in CRE distribution. Lodha said Shome’s arrival was at “an important time” as the group looked “to capitalise on strong presales to raise development financing” for Lincoln Square and its other key London project, No 1 Grosvenor Square in Mayfair.
One Grosvenor Square is also being prepared for construction to start. Lodha won the bidding for the former Canadian High Commission’s MacDonald House in 2013 with a £306 million offer and financed the site acquisition with JP Morgan and mezzanine again from Apollo.
John Cole, managing director of Cain Hoy, declined to comment on the pricing of the Lincoln Square facility. He said the deal “ticked all the boxes for the kind of value-add transaction we like to do. It is a structured, bespoke facility which needs an understanding of real estate.”
The private investment company, led by Jonathan Goldstein, has completed several other large London residential structured financings, but this is the first it has announced this year.
“We go for quality over quantity and we are currently very busy on a number of different opportunities in the UK”, Cole said. “Pre-Brexit, the market was quite borrower-friendly; since the Brexit vote, while liquidity remains, it can be a bit more difficult to access – hence the reason we are so busy.”
Shome said that “whilst it is clearly a challenging time for some lenders, there remains an opportunity to do some good deals and build strong relationships.”
Gabriel York, co-head of Lodha UK, said: “We are seeking to build strong relationships with funding partners where we have a common vision for development and Ab will be instrumental in helping us achieve this goal.” The company hired Savills’ head of international sales, Charlie Walsh in March and last year, Caroline Foster, former development director at Lendlease.