Deutsche Asset Management has financed investor NEO Capital’s debut UK acquisition, with a £27.6 million loan arranged by advisor HFF on an office scheme in London’s Hammersmith area.
NEO Capital acts on behalf of Middle Eastern private investors to provide real estate and private equity deals. As well as the UK, it targets opportunities in Germany and the US.
The firm made its first UK investment with the acquisition of 43 Brook Green, an 85,000-square-foot office building, located close to the London Olympia exhibition centre. The building is occupied by a single tenant, US-based engineering company CH2M, which has a lease until 2030.
HFF acted for NEO Capital to source the bilateral, floating-rate loan. The terms of the loan were not disclosed, although Real Estate Capital understands that the 50 percent loan-to-value facility has a four-year term and is priced at just above 200 basis points.
“This was a very competitive financing assignment given the high-quality asset and well-margined loan request,” said Michael Kavanau, senior managing director and leader of HFF London’s debt advisory platform.
“Lenders are comfortable with the supply and demand fundamentals in Hammersmith, and we expect to see more capital from Asia and the Middle East on the hunt for the 6 percent to 8 percent cash-on-cash return the location delivers,” added Claudio Sgobba, the HFF senior director who represented the borrower.
HFF entered the UK market with the November 2016 acquisition of London-based advisory firm Leon Partners, which focused on investment banking and corporate finance.
Deutsche Asset Management typically lends senior debt at up to 60 percent loan-to-value through its European Senior Debt Fund. It also provides stretched senior, whole loans and subordinated loans through a €750 million mandate from German insurance firm Bayerische Versorgungskammer (BVK).