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Lloyds, Investec back Cain Hoy jv with £190m development loan

Lloyds Bank Commercial Banking and Investec Structured Property Finance have provided a £190m development facility to Cain Hoy and Sager Group for their £400m Islington Square joint venture in London. Investec has also taken a minority equity stake in the project. It provided an initial refinancing loan for the scheme which has now been rolled into the development facility with Lloyds.

Lloyds Bank Commercial Banking and Investec Structured Property Finance have provided a £190m development facility to Cain Hoy and Sager Group for their £400m Islington Square joint venture in London.

Lloyds is lending £100m of the three-year loan with Investec contributing £90m of the facility, which will be used to build out the partly pre-let scheme. The facility reflects a loan-to-cost of around 65% putting the development cost of the scheme at just over £290m. Cain Hoy has provided about £100m equity.

Investec had an earlier refinancing, which took out a site acquisition loan to Sager that had ended up with Ireland’s NAMA, rolled into its new facility. It has also taken a minority equity stake in the project.

Islington Square, London
Islington Square, London

“Islington Square will create a first class destination for the borough and our investment in the scheme alongside the development debt package underlines our belief in its quality,” said Simon Brooks of Investec’s new business team.

Lloyds acted as agent, security trustee and loan co-ordinator and will provide hedging facilities as part of the deal.

“Helping our clients transform unused real estate into vibrant spaces in which people can live, work and shop enables us to assist in creation of tangible economic value, jobs and community,” said Graeme Alfille-Cook, head of developers at Lloyds’s commercial real estate team. Lloyds intends to hold the loan and has no plans to distribute it via syndication, said Alfille-Cook.

The 500,000 sq ft Islington Square on Upper Street in north London is scheduled to complete in 2017. The mixed-use scheme is on the site of the former North London Mail Centre and will contain retail, leisure and residential elements. Part of the residential and leisure components, which include a gym and cinema, have been pre-let or pre-sold.

Developer Sager bought the Mail Centre, which Royal Mail had occupied since 1904, in 2003 for £30m. It formed a partnership with Cain Hoy last year to develop the site. Planning consent has been granted and work on the site began last year.

“As we prepare to launch the residential element of the scheme, we are pleased to have secured this financing which recognises the rare nature and exceptional promise of this prime site at the heart of Islington,” said Jonathan Goldstein, chief executive of Cain Hoy.

It is the second significant Cain Hoy project financed by Investec. In June, the lender provided a debt and equity package for a Cain Hoy consortium’s acquisition of an east London development site for its £750m The Stage project.

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