New European lender-investor Cain Hoy has agreed a deal to finance the redevelopment of the iconic Shell Centre on London’s South Bank, Real Estate Capital can reveal.
The affiliate of the $210bn Guggenheim Capital Group is to make one of the UK’s largest ever loans on a single asset that will be held entirely on balance sheet. The deal marks Cain Hoy out as a significant new player in the European real estate lending market.
Cain Hoy is providing property developer and investor Almacantar around £370m to finance its £550m purchase of the oil giant’s 300,000 sq ft headquarters plus 500,000 sq ft of speculative office space. The quantum reflects a loan-to-value of around 67%.
At the same time, a second, c£450m loan has been agreed with a club of banks to finance the development of residential space at the complex comprising up to 877 new homes. The lenders include Lloyds Banking Group, Barclays, HSBC and Qatari National Bank.
The 1.5m sq ft redevelopment of the Shell Centre site is being carried out by Braeburn Estates – a joint venture between Canary Wharf Group and Qatari Diar. Capital will be drawn down in tranches throughout its construction before handing over the offices to Almacantar on completion, which is expected in 2019. The duration of the Cain Hoy loan will cover the construction period before converting to an investment loan of around two more years.
Braeburn bought a 999-year leasehold of the site from Shell in July 2011 for £300m and at the same time agreed a new leasing deal for Shell’s 27-storey headquarters.
Braeburn has also agreed a £200m forward sale of Building Three at the scheme to Elliott Rosenberg, a property investor and one of the owners of the private members Arts Club in Mayfair. The building will include 301 units for private rental and affordable housing.
The financing and redevelopment of all elements has been agreed subject to a final planning hurdle being overcome. In June the secretary of state, Eric Pickles approved the redevelopment, the planning application having been called in in September last year.
However, the proposals have been met by protests from campaigners who claim Pickles made his decision without considering all appropriate evidence. The developers were allowed to withhold their report on the viability of affordable housing for commercial reasons but the prospect of a legal challenge is still a possibility.
Cain Hoy was launched in September by previous Guggenheim employees. The company hit the headlines in the UK last month when it made an attempt to buy Tottenham Hotspur Football Club, but ultimately withdrew after not being able to agree a price. Todd Boehly, a co-founder of Cain Hoy and president of Guggenheim Capital, is also a co-owner of baseball team the LA Dodgers and the company was looking to expand its sports portfolio.
Real Estate Capital revealed in August that Guggenheim had agreed a £130m financing of the redevelopment of one of the landmarks of the London 2012 Olympic Games – the 1.2m sq ft Press and Broadcast Centres – with owner iCity, a joint venture between Jamie Riblat’s Delancey and Infinity SDC, a data centre operator.
The reasons for establishing a separate entity are thought to include paving the way to channel investment from third parties other than Guggenheim into its investments in a more straightforward manner.
The company is headed by chief executive Henry Silverman and headquartered in Greenwich, Connecticut. Its London office is led by head of European investments, Jonathan Goldstein (pictured). Goldstein was previously deputy chief executive of Gerald Ronson’s Heron International before joining Guggenheim as its first head of real estate and direct investment for Europe in January.
The team also includes John Cole, the former head of UK lending for LBBW and real estate finance director at Santander as well as Arrif Ali, who was previously at Heron International with Goldstein working in the corporate finance team.
Last month the company bought Islington Square, a 4.5 acre mixed-use project in north London that will include a 500,000 sq ft shopping centre and a new residential district alongside Sager Group.
Almacantar is headed by former Land Securities executive Mike Hussey and backed by the Italian Agnelli family.
All parties declined to comment.