Blackstone has put out a low- leverage financing mandate for its purchase of Alban Gate on London Wall, EC2. The private equity firm is under offer to buy the 380,000 sq ft office building from Carlyle Group for around £300m, as part of its core-plus strategy.
“Gearing won’t be above 60%,” said a banking source. “Initial offers have been submitted and now they are negotiating with the banks to improve terms.” The building, which was JPMorgan’s UK headquarters before the group’s move to Canary Wharf, has been refurbished and is now fully sub-let, making it an attractive deal – potentially for a fixed-rate insurance company lender.
The distinctive building, designed as two towers with a connecting bridge, is sub-let mainly to law firm Nabarro and Lloyds Bank. Also in the City of London, the financing of the iconic No. 1 Poultry at Bank is under way. Perella Weinberg is close to buying the 150,000 sq ft, James Stirling-designed office and retail property for £110m. It will inject £20m of equity and, with costs of £5m-6m, is seeking 57% leverage.
The £77m borrowing requirement is thought likely to be priced at around 300 basis points, for what one lender who had seen the mandate called “a value-added proposition”. It is yet another example of how far debt pricing has fallen; in February last year, when Morgan Stanley financed the Adelphi building with a £190m loan, it was priced at more than 400bps.
The lender said No. 1 Poultry “is in a great spot” but leases to the two largest tenants, Aviva and Regus, are set to expire in September and October next year. Another lender said: “It is a difficult building. Retail on the ground floor is not working well; it could be repositioned.” Nonetheless, “banks are still interested”.
Ireland has returned to the spotlight with a wave of property loan trading in recent weeks. NAMA has sold its Project Tower loan portfolio to Blackstone for around €1.1bn. The loans were made to Irish developer Michael O’Flynn, secured against assets in Ireland, the UK, Germany and Spain.
Kildare Partners had previously acquired €100m of what was originally a €1.85bn look book. There have already been €29.8bn of loan sales so far this year, according to Cushman & Wakefield, boosted by IBRC’s liquidation.
A sales process is under way for the remaining €1.9bn of debt from IBRC’s projects Evergreen, Stone and Sand, which did not receive offers at reserve price. Evergreen now comprises €400m of corporate loans; Stone €1.4bn of Irish commercial loans; and Sand €648m of Irish residential mortgages.
Dublin-based Permanent TSB also plans to sell almost €10bn of assets in the near future. Other ‘live’ sales are Ulster Bank’s €775m Project Button, and NAMA’s €300m Project Spring and €225m Project Drive. According to CoStar, Project Button’s final bidders are: Blackstone Real Estate Debt Strategies, LaSalle Investment Management, and a combined bid by Kennedy Wilson and Deutsche Bank. Final bids are due on 9 May.
Involved in the last stages for Project Drive are Development Securities, Patron Capital and CarVal Investors.