Club of banks commits £500m to Brookfield’s London development

A club of six international banks has agreed to provide around £500 million of development funding for Brookfield Property Partners’ 100 Bishopsgate tower in a major post-Brexit City of London financing.

Wells Fargo is understood to have arranged the financing, which closed on 6 July in the wake of the UK’s decision to leave the European Union. It is joined in the deal by German bank Helaba, French bank BNP Paribas, Italy’s Banca IMI, Singaporean lender UOB (United Overseas Bank) and Chinese bank ICBC (Industrial and Commercial Bank of China).

The club has provided a five-year loan which will fund the remainder of the development process plus a period of time after the 962,000 square foot tower is completed. Construction of the 37-storey scheme began last May and is scheduled for completion during 2018. The financing has been agreed at a relatively conservative loan-to-cost.

Royal Bank of Canada agreed to pre-let around 250,000 square feet last November, while investment bank Jefferies Group is due to take around 150,000 square feet.

The loan has been priced in the region of 300 basis points, with a provision to ratchet the margin down subject to further pre-lets, according to a market source.

The deal represents a significant commitment in the core London market by an array of international banks, despite the uncertainty in the UK economy after the Brexit vote. The strength of the sponsor, the prime location of the asset and the fact that a significant proportion of the building has been pre-let is likely to have ensured the banks’ commitment despite the referendum result.

The Brexit vote has thrown the start of some other large central London development schemes into doubt, especially those which do not have substantial pre-lets. Building work on the City’s tallest tower, AXA’s 22 Bishopsgate, paused ahead of the referendum.

The involvement of a Chinese and a Singaporean bank in the 100 Bishopsgate club signals a continued appetite from Asian lenders for core London properties. In April, ICBC bought took a 50 percent stake in Lloyds Bank’s £185 million financing of the O2 arena in London’s docklands. UOB was recently in the news due to the Singaporean bank placing a moratorium on new mortgages for customers buying London homes in the wake of the referendum vote.

100 Bishopsgate, which has been designed by architect Allies & Morrison, sits adjacent to the Salesforce Tower, formerly known as the Heron Tower, near Liverpool Street station in the City of London.

Planning consent for the scheme, which also includes some retail space, was granted in 2011.