US insurer finances Blackstone’s City buy

Blackstone has secured £200m of financing for its purchase of 125 Old Broad Street in the heart of the City of London.

MetLife has provided a new six-year loan for the private equity firm’s purchase at a loan-to-value of 62.5%. The loan is thought to have a margin of around 150 basis points.

The deal is another sign of the depth of the European lending market for large, prime assets and the competitiveness of non-bank lenders.

Blackstone bought the 330,000 sq ft office tower near the Bank of England in July for £320m from Brookfield; MetLife had been the previous financier. The building is multi-let to tenants including DTZ, Gatehouse Bank and law firm King & Spoulding.

The acquisition is part of Blackstone’s “core-plus” strategy that it started to implement this year which invests in buildings in prime locations with asset management propositions and supplements  its opportunity fund’s investment in highly distressed assets. Its first European deal for this strategy was its £296m purchase of Alban Gate, also in the City of London, in May from Carlyle Group.

MetLife jointly funded the Alban Gate purchase for Blackstone alongside Wells Fargowith a seven-year £185m loan also at 62.5% LTV, and Wells is understood to have been interested in funding 125 Old Broad Street.

Within Europe the US insurer has had a focus on prime, central London assets and predominantly on senior lending in recent years. As well as the Alban Gate deal it provided a £164m refinancing of Woolgate Exchange in January, which was then owned by TPG and Ivanhoé Cambridge, and in May lent Greystar £122.8m for its purchase of three student accommodation assets in the capital from UNITE.