Grosvenor finances London office fund at sub 120 bps margin

Grosvenor Fund Management’s London Office Fund has been refinanced by two banks aiming to establish themselves in the increasingly competitive London lending market.

BNP Paribas and Sumitomo Mitsui Banking Corporation have provided £201m of finance secured on the fund’s portfolio of four prime central London office buildings at a competitive margin, though on low leverage, thought to be below 120 basis points. The loan is for a term of less than five years at a loan-to-value ratio of just under 40%.  The deal has been structured pari passu and the debt is not expected to be syndicated.

The assets are:

–          Almack House, St James

–          Belgrave House, Victoria

–          Fleet Place House, City of London

–          10 Grosvenor Street, Mayfair

Romain Simon, head of real estate finance UK, BNP Paribas said the deal demonstrated “our willingness to support our key clients.”

Robert Carney, head of EMEA real estate at SMBC said: “This transaction demonstrates SMBC’s commitment to expanding our client led financing capabilities in the UK real estate market.”

The fund was extended by four years in 2012 and is fully invested. Grosvenor recently launched a second London fund with capital from a cornerstone Danish pension fund investor and hopes to bring in two or three more investors to get to a £150m first closing. The second fund will have a core-plus strategy.

Giles Wintle, regional director, Grosvenor Fund Management, Europe said, “We remaincommitted to the London Office market and this fund, together with London Office II, iscore to our activity in the UK.”

BNP Paribas and SMBC acted as joint mandated lead arrangers on the financing andhedging, and BNP Paribas is acting as agent.

In July BNP completed its first sole UK underwrite this year for Tishman Speyer with a £105m loan to finance its £210m purchase of The Point in London’s Paddington Basin. Sumitomo has been taking participations in London deals or forming clubs; last month the Japanese bank bought £30m of senior debt secured against Delancey’s Walbrook Building in the City of London that was syndicated by Citi.