Children’s Investment Fund makes £350m loan on London tower

The Children’s Investment Fund (TCI) has made its first loan on a tower in central London, backing Almacantar’s Marble Arch Place scheme with a whole loan of close to £350 million, Real Estate Capital can reveal.

The debt process for financing the circa £500m-plus development project in the heart of the capital’s West End was run last year and is now very close to being finalised. Starwood is thought to have been the underbidder.

Almacantar, which is headed by chief executive Mike Hussey, won planning permission for the residential-led project at the western end of Oxford Street last year after buying the site in 2011 for £80 million.

The existing tower is being demolished. It will be replaced with a new 18-storey residential tower with 54 apartments with views of Hyde Park, designed by international architect Rafael Vinoly. The scheme also includes about 100,000 sq ft of offices in a seven-floor building, 18,000 sq ft of ground floor retail and an Odeon cinema.

TCI has been very active in New York in recent years, providing construction finance for a number of high-profile Manhattan residential and hotel towers. Although it is based in London, this is believed to be the $8bn fund’s first real estate finance loan in the UK.

The hedge fund has rarely made press announcements since it was founded in 2003 by activist investor Sir Chris Hohn. It was affiliated with the charity run by Hohn’s ex-wife, Jamie Cooper-Hohn, called The Children’s Investment Fund Foundation which helps children in developing countries. The hedge fund no longer donates on a contractual basis but may do on a discretionary basis.

In US real estate, TCI started providing construction finance early in the current cycle, in Boston and for prime Manhattan condominium towers, making good returns and high margins. In New York it backed Harry Macklowe’s 432 Park Avenue, Larry Silverstein’s 30 Park Place and Zeckendorf Development’s 520 Park Avenue.

Recently it returned to construction lending, this time financing development on the city’s west side overlooking the Hudson River, in the area between 28th and 42nd streets where Related Companies is building out its 13 million square foot Hudson Yards scheme.

TCI provided an $850 million construction loan for 15 Hudson Yards, and in February backed a 12-storey condo nearby at 160 Leroy Street which is being built by hotelier Ian Schrager with Ares Management, Weinberg Properties and William Gottlieb Real Estate.

Almacantar was launched by Hussey in 2009 with backing from Italy’s Agnelli family. The company also acquired the iconic Centre Point office tower at the opposite end of Oxford Street shortly before it bought Marble Arch Tower. Centre Point, which is listed, is being converted from offices to residential.

Central London residential development schemes are currently being financed off margins of 300-400 basis points plus fees, equating to high single digit all in costs for senior debt.

CBRE Capital Advisors’ debt & structured finance team advised Almacantar on the financing.