UK banks finance Canary Wharf’s ‘Newfoundland’ PRS skyscraper

Canary Wharf Group has financed the development of its 60-storey Newfoundland PRS residential tower at its London Docklands estate with Barclays and Royal Bank of Scotland, Real Estate Capital  has learned.

However, Qatar National Bank, which had intended to be part of the lending club and which has participated in other loans to the property company since it was taken over by Brookfield and the Qatar Investment Authority in March 2015, did not lend.

Canary Wharf Group’s new owners are keeping faith with the plan, drawn up in 2014, to become a big developer and holder of private rented sector (PRS) units in the expectation that returns can exceed those of offices. The Newfoundland tower, at the western end of the Canary Wharf complex, will have 566 luxury flats for private rental.

The initial development finance requirement from the commercial banks for Newfoundland was believed to be up to £200 million. The financing was signed at the end of March and included an additional infrastructure and land loan from government body the Homes & Communities Agency which is also lending on Canary Wharf’s residential schemes at the 13.6 hectare Wood Wharf site, to the south of the existing office complex.

In 2014, before the Brookfield/QIA takeover, Canary Wharf set up a unit called Vertus Residential to develop, own and manage a rental residential estate. Brookfield and QIA are, however, also thought to be talking to potential partners with PRS experience about coming in as investment partners and managers on some or all of the company’s slated PRS projects.

Wood Wharf’s 1.6 million square foot first residential phase includes four developments; two schemes for sale and two for private rent. Some £620 million of debt finance was put in place for their construction in June last year by a club of four banks: Barclays, HSBC, Lloyds and QNB.

RBS was not part of that club, but has since set out its stall to be a leading lender of development finance to the PRS sector.

The bank’s Chiara Zuccon, head of private rented sector at RBS, said: “This transaction demonstrates our commitment to Canary Wharf Group, which is one the UK’s leading and most capable developers, and also reflects our support for the UK’s growing build-to-rent sector.

“We believe that large scale purpose-built private rental schemes have an important role to play in increasing and diversifying the housing supply in London and across the UK.”

Newfoundland, which is under construction, was designed by Horden Cherry Lee with an eye-catching ‘transparent diagrid’ structure, like the one used in the City of London ‘Gherkin’ tower.

Real Estate Capital broke the story that Brookfield and QIA would bid for Canary Wharf, in November 2014.