Development finance

Trio finance prime London development with £155m

TH Real Estate, Allianz and a third undisclosed debt provider provide a six-year bullet loan for the landmark 80 Fenchurch Street building with a LTV understood to be in the 50% range.

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Three alternative lenders have teamed up to provide £155 million (€179 million) of finance for 80 Fenchurch Street in London.

The financing to develop the prime office property, owned by investment manager Partners Group and developed by YardNine, has been underwritten by Allianz Real Estate and TH Real Estate, contributing £50 million each. An undisclosed third alternative lender has provided the rest of the financing.

The debt facility, understood to have a loan-to-value ratio in the range of 50 percent, consists of a six-year bullet loan, divided into a three-year development loan and a three-year term loan. The financing has been structured as a £135 million development loan with a £20 million increase upon completion.

“The medium-term structure provides sufficient time to deliver and execute the letting of the building,” Roland Fuchs, head of European debt at Allianz, told Real Estate Capital.

“Construction loans in the London market have certainly the most attractive risk/return profile across Europe,” Fuchs added. “Also compared with senior lending in London, where the pricing is very competitive, almost down to pre-Brexit levels at the moment.”

This loan is the first within Allianz’s ‘enhanced’ debt programme, which involves the firm expanding its debt lending activity to provide stretched senior and junior financings with LTVs of up to 75 percent. It also includes development loans covering repositioning or refurbishment of assets as well as ground-up construction at an LTC range of 50 percent to 65 percent.

The 80 Fenchurch Street building will be a 14-storey landmark for the City of London comprising 250,272 square feet net internal area, split into 238,593 square feet of grade A office accommodation and 11,679 square feet of retail space.

The facility will provide “operational flexibility” to Partners Group, said Christian Janssen, head of European debt at TH Real Estate.

Fuchs added that the deal allows Allianz to diversify into new products, while maintaining a commitment to prime asset quality and location.