In its largest lending deal to date, London-based specialist lender Maslow Capital has provided a £258 million (€291 million) construction financing facility to fund the delivery of a major residential-led scheme in the upmarket Kensington area of the UK capital.
The four-year financing was provided to a joint venture between SevenCapital, a UK-focused developer, and MARK, the pan-European real estate manager. It will support the delivery of a prime scheme at 100 West Cromwell Street in the West London district, which will include 462 homes across seven buildings, including a 29-storey tower.
The scheme will comprise a mix of units, ranging from studio apartments to four-bedroom houses, and will also include amenities including a gym and spa, plus 12,000 square feet of commercial space. It will be 40 percent allocated to affordable housing.
UK contractor Ardmore Construction has been appointed as the main contractor. An on-site start is scheduled for the summer, with the property being built in phases above an operating car park for supermarket Tesco.
James Henry, responsible for deal origination at Maslow, described the deal as a “milestone for the business”, adding Maslow will seek to do further loans of this magnitude this year. The company’s previous largest lending deal was a £123 million financing of two residential towers in Manchester in 2018.
Several factors encouraged the lender to commit to such a significant development financing, despite the uncertain economic backdrop, Henry explained, not least the experience of the scheme’s backers.
“We have a best-in-class sponsor, with which we have a long track-record on previous schemes,” Henry said, referring to SevenCapital, which Maslow has financed on four previous occasions. He added the involvement of MARK bolstered Maslow’s confidence in the project.
Henry acknowledged that backing experienced organisations is critical in the current inflationary environment, where construction costs have come under pressure. “A focus on the delivery partner is key, and Ardmore is extremely experienced in the construction market,” he explained.
Henry added underwriting such a large development financing required detailed analysis of the real estate fundamentals of the market in which it is being delivered. “The scheme is in zone one London and, notwithstanding the short-term immediate [conditions] in front of us, it is key to look at the long-term fundamentals – it is well-located and the right asset class for the area.”
He added: “We wanted to be comfortable that the build costs factor in inflation. So, rather than a point-in-time analysis, we considered what the market is expected to do in the next four years to ensure we are backing a scheme that is future-proofed.”
Despite the near-term economic volatility, Henry insisted Maslow has a strong appetite for funding well-located, high-quality ‘living sector’ assets.
Maslow was founded in 2009 with the intention of providing loans to developers and banks to enable the completion of part-built UK residential schemes in the wake of the global financial crisis. In the following years, it broadened its activities in the development financing market across residential sectors.
In January 2022, Arrow Global, an investor and asset manager in credit and real estate, announced the acquisition of a “significant minority stake” in the company, in a deal it said will accelerate Maslow’s growth plans.
“Our decision to acquire this stake is consistent with Arrow Global’s strategy of expanding capital light revenues in attractive segments of the credit and real estate space where we can raise and deploy third-party capital effectively, delivering sustainable market-leading returns,” Zach Lewy, group chief executive of Arrow, said about the deal at the time.