Lloyds backs Ballymore’s reinvention of Nine Elms

The UK bank has provided £82m of development finance for a 10-storey building at the Embassy Gardens regeneration project in London.

Lloyds Bank has written an £82 million (€92 million) whole loan to developer Ballymore to bring forward an office building at Embassy Gardens, its regeneration project close to the site of the new US embassy in London’s Nine Elms.

The three-year development loan will back the first office development at Nine Elms, One Embassy Gardens, located between Vauxhall and Battersea. The 10-storey building comprising 211,000 square feet, is already substantially pre-let by Penguin Random House and due for completion in 2019.

This pre-let deal has “significantly de-risked” the asset, Madeleine McDougall, head of commercial real estate for Lloyds, told Real Estate Capital.

“We don’t back speculative schemes and have a prudent approach to risk. Both the developer and asset must have a good, long-term story,” McDougall added.

The Nine Elms development project also includes luxury residential schemes, which have previously attracted finance from China’s Ping An Bank and Barclays.

The schemes are expected to bring almost 20,000 mainly luxury homes out of the ground in the Nine Elms regeneration area but, following the Brexit vote, this residential push has been questioned by some industry players.

Naomi Heaton, chief executive of investment company London Central Portfolio, which operates in the high-value sector in prime central London, told Real Estate Capital in December 2017 that developers bringing new luxury pads to the market have met softer demand.

“The new-build market is struggling, particularly south of the river between Battersea and Vauxhall at Nine Elms where there is a huge amount of stock in the pipeline. All the tax changes have taken the wind out of the sails; there have been significant price falls and it will take a long time to find its way back to growth,” she said.