Oxford seeks £270m Watermark Place refinance

Oxford Properties has commenced a search to refinance Watermark Place in the City of London, Real Estate Capital can reveal.

The property arm of the C$70bn Canadian pension fund, Ontario Municipal Employees Retirement Systems, has appointed Eastdil Secured to source the £270m refi.

A £270m loan would reflect a loan-to-value of around 50%, the building being valued at more than £500m. The big-ticket refinancing is expected to appeal to an array of investment banks, traditional bank lenders and insurance companies.

A £140m loan on the property comes due in May and was put in place at the end of 2010. It was co-arranged by Helaba and Berlin Hyp with Sumitomo also participating.

The 541,000 sq ft building at 1 Angel Lane is situated on the north side of the Thames to the west of London Bridge. It was let in its entirety to Nomura in July 2009. It was jointly developed by Oxford and UBS Global Asset Management and completed at a similar time to the Nomura letting.

A year later UBS came close to selling its 50% stake to a German fund but Oxford exercised a pre-emption right, paying around £200m to take full control of the building.

Oxford, which is led in Europe by senior managing director Paul Brundage, is undertaking a gradual debt diversification strategy to increase flexibility across its European portfolio.

In July last year it put in place a £250m corporate facility, guaranteed by parent OMERS, with Wells Fargo, CIBC and Lloyds.

Last September Alison Lambert, Oxford’s European finance director told Real Estate Capital: “All the asset lending [in the European portfolio] was with German pfandbrief banks until about a year ago, but we needed to diversify and for relationships to be less rigid in terms of loan-to-values and covenants, which was a key factor with the banks we chose.”

The corporate facility is in part being used to finance the development of its 500,000 sq ft London Wall Place in the City of London, which is being undertaken via a joint venture with Brookfield. The scheme, 310,000 sq ft of which is pre-let to Schroders, will cost £165m to develop and is being financed with £130m of debt.

Oxford’s European portfolio also includes a 50% stake in the “Cheesegrater” at 122 Leadenhall Street, the luxury shopping centre, Royal Exchange (both in the City), 130-137 Bond Street in the West End and 32 rue Blanche in Paris.

Oxford declined to comment on the Watermark Place refinancing.