Lloyds Bank Commercial Banking has provided a £185 million whole loan which will in part finance the development of a designer outlet scheme at London’s O2 arena.
The loan has been provided to a joint venture between Crosstree Real Estate Partners and Anschutz Entertainment Group (AEG), in the first financing deal between the parties. The four-year loan is split between a development facility for the new scheme and a refinancing of the existing retail and leisure space at the venue.
Crosstree and AEG plan to develop a 204,000 square foot designer outlet scheme targeting premium and high street retailers. The O2 currently has 370,000 square feet of retail and leisure, which is fully-let to 24 restaurant brands and a cinema. A contractor for the new scheme is expected to be appointed this quarter and completion is scheduled for late 2017.
Lloyds plans to syndicate a portion of the £185 million whole loan but said that it will retain a large interest. Eastdil Secured advised the borrowers.
“This is the latest in a long-line of large-scale development projects that we have recently backed in the UK as well as being one of the biggest loans that we have fully underwritten,” John Feeney, global head of commercial real estate at Lloyds Bank said.
The O2, formerly known as the Millennium Dome, was converted from an exhibition space to a concert venue in 2007. Originally conceived in 1994 by John Major’s Conservative government, the controversial dome was delivered under Tony Blair’s Labour government as a public exhibition space to mark the start of the new millennium in the year 2000.
“We have worked closely with the team at Lloyds Bank over many months to structure this complex transactions,” said Sarah McGuigan, chief legal and development officer of AEG Europe. “Now that it is in place, we can begin work on the next chapter of this world famous landmark’s history. AEG and its partners transformed the building into what it is today and this exciting retail development will complete the existing vision, providing a huge boost to the Greenwich Peninsula and South East London,”
Peter Robinson, a principal at Crosstree, said: “Following our recent acquisition of a 50% interest in The O2, a preeminent leisure and retail destination, we are pleased to formalise a new relationship with Lloyds Bank who share our vision for the continued transformation of this asset.”