Westfield set for largest post-crash debt deal at Stratford

Eurohypo and Credit Agricole are among at least three banks in talks to raise a likely £700m-plus of debt against developer’s flagship UK scheme

Westfield is in talks with a handful of banks about raising debt on its £1.8bn Stratford City shopping centre. The Australian developer has lined up at least three underwriting banks, including Eurohypo and Credit Agricole CIB, to provide an investment loan for its flagship 1.9m sq ft UK development in east London. The scheme is due for completion in September and is more than 75% prelet.

It is thought the loan-to-value ratio will be under 50%, but even at an LTV ratio of 40% it would equate to around £700m, making it the largest loan since the financial crisis. The banks are thought to be close to completing credit approval for the loan.

Westfield’s European head Michael Gutman and finance director Philip Slavin are leading the financing on behalf of all the centre’s owners. Last December, two large pension fund managers, Dutch manager APG and the Canada Pension Plan Investment Board, bought a 50% stake in the scheme for a total of £871m. They are advised by Henderson Global Investors.

Although the volume of debt is large, there are several banks in the market now that would take a large participation in prime deals. William Newsom, UK head of valuation at Savills, said at MIPIM this month that 16 lenders are seeking £75m-plus participations. “I identified half a dozen lenders that might be prepared to lend £100m on their own,” he said.

One banker said that raising secured finance is an unusual step for Westfield, which has preferred to keep security over its assets and raise unsecured borrowings at a corporate level. The Stratford City shopping centre, which will be anchored by a large John Lewis store, will open well ahead of next year’s Olympics Games, which will be held on adjoining land.

Last week, Wellcome Trust was reported to have made a bid worth £1bn to buy most of the Olympic Park, which is to be developed after the games as 10,000 homes. Wellcome is already a bidder for the Olympic village’s 2,800 flats, along with: Delancey and Qatari Diar; Dorrington and Pinnacle Capital; Galliard Homes; Grainger with Moorfield Group;  Hutchison Whampoa; LeFrak Organisation, Aviva and JP Morgan; London & Stamford with David Wilson and Sir Robert McAlpine; and William Pears Group with Urban Splash.

Eurohypo is believed to be providing all the debt for the acquisition of West End tower Centre Point by Mike Hussey’s Almacantar. The deal is expected to go through in the next week or so with a £120m price tag. The tower, in what is now being dubbed the St Giles area of the West End, is being sold by Deloitte, administrator to property company Targetfollow.