A line up of at least seven or eight banks are in the bidding process to finance the Sanctuary Buildings in Victoria, SW1.
The buyer of the 227,000 sq ft office block on Great Smith Street – private equity firm Henley Investments – is seeking a total £135m of debt for a term of three years, plus an additional one year.
It has hired Eastdil Secured to help source whole loan financing. The senior portion equates to £75m.
The asset is leased to a government tenant until 2017, at which point the lease will be regeared and the property refurbished.
There is also a potential redevelopment play. “The upside plan could be to convert it to residential” said one banking source.
There are a number of lenders that provide residential funding including the likes of Barclays, Deutsche Bank and Société Générale.
“The location is great and the strategy is credible” commented a lender that is involved in the bidding. “Conversion is not easy but it is one of the options. The base case scenario is for the property to be refurbished and let at decent levels.”
Henley is buying the Sanctuary Buildings from Tishman Speyer which put the asset up for sale at around £185m. It bought the asset in July 2011 for £175m.