ING and LBBW have completed the syndication of their £400 million joint underwrite of the Salesforce Tower in the City of London, which closed in April, Real Estate Capital has learned.
Asian lenders, including Taiwanese banks, have bought slices of the loan, with ING and LBBW selling down more than £200 million to a total of eight lenders. The syndication includes six Asian banks which have not previously invested in the UK commercial real estate market.
Real Estate Capital understands that the new entrants to the market include three Taiwanese banks – Bank of Taiwan, Hua Nan Bank and Chang Hwa Bank – as well as Agricultural Bank of China, plus a Korean and a Japanese bank.
The line-up is completed by another Japanese bank which has previously invested in ING’s syndicated loans, thought to be Shinsei, as well as a German bank.
The original financing was one of the major commercial property loans to be written in the London market in the run-up to the UK’s referendum on EU membership, and efforts to syndicate the debt began before the June 23 vote.
Around £130 million of the commitments, understood to be from four banks, were secured before the referendum. “The transaction is arguably one of the few syndication exercises initiated before the UK Brexit referendum and completed after it,” ING and LBBW said in a statement.
The successful completion of the syndication shows that Asian banks remain keen to invest in debt held against prime London properties, despite the Brexit vote. It is understood that the absence from the market of some typical buyers of syndicated European property debt in the run-up to the referendum forced ING and LBBW to seek out new entrants to the sector in the aftermath of the vote.
The original financing was provided at a loan-to-value of just below 60 percent for five years, with £30 million amortisation. The financing was written to a consortium led by Heron International, which developed the building, originally known as the Heron Tower. The other owners of the 46-storey office tower, located at 110 Bishopsgate, include the State General Reserve of Oman and members of the Saudi royal family.
“The investors are pleased that the building has proved an attractive vehicle for a number of diverse lenders with its excellent location, build quality and tenant mix,” commented Heron CEO Gerald Ronson. “The initial loan was secured on competitive terms pre-Brexit and it is a testament to the building and the London market that the syndication has proceeded so smoothly post-Brexit.”
The Salesforce Tower was developed between 2008 and 2011, during the market downturn. However, it is now fully let, with software company Salesforce.com occupying ten floors and the remainder multi-let. A new lease signed in October with an existing tenant, trading company Trailstone, at a record level for the tower of £90 per square foot.
The development of the tower was initially financed with a £370 million development loan provided by a consortium of banks including Eurohypo, now Wells Fargo, back in 2008. In October 2013, Starwood Capital agreed a £288 million financing of the completed asset, with additional equity also provided by the owners. The ING and LBBW loan repaid Starwood’s facility.
“We are very pleased with the outcome, this is good news not only for us, but for the entire market as it proves that deals can still be done in spite of the result of the referendum,” said Jean-Maurice Elkouby, head of the ING Real Estate Finance syndication desk.
“The success of the syndication vindicated our market view,” added Andreas Kessler, head of real estate finance syndication at LBBW.
“In addition to European players, Asian players keep enlarging the liquidity pool available for the UK,” Kessler continued.
ING Real Estate Finance has closed 10 UK financing deals since the Brexit vote, according to managing director and head of UK real estate finance Peter McAnally, with 2016’s UK volumes expected to be in line with the previous year’s. Lending has been weighted towards the core office and retail sectors and eight of the 10 post-referendum deals were acquisition financings. Two of the deals have been, or are close to being syndicated.