Why Cain backed speculative London offices with £86m loan

Speculative development financing deals in the office sector are relatively rare in today’s market, but private real estate firm Cain International says ESG-focused design and a prime location were determining factors in its decision to lend against a new London scheme.

The UK-headquartered private real estate company has issued an £86 million ($121.6 million; €100 million) loan for the development of a 12-storey asset, which is being built at 100 Fetter Lane, Farringdon, by private equity firm BauMont Real Estate Capital and London-based developer YardNine. It will comprise 90,000 square feet of naturally ventilated workspace, alongside 5,000 square feet of retail.

Edenica will include an 8,000 square feet biodiverse roof garden, a garden square and 230 parking spaces for bicycles, as the sponsor aims for a BREEAM ‘Outstanding’ rating. Workspaces will be three metres high and have windows that open, in a bid to improve occupiers’ experience. The backers are seeking to achieve net-zero carbon emissions in use.

Construction will complete in summer 2024. Tanja Yerolemou-Ennsgraber, senior vice-president – real estate finance at Cain International, said the sponsors are creating a property that is wholly aligned with the needs and desires of the occupiers of the future.

“With development you are designing a product for a market that might be different by the time that asset is finally delivered, and BauMont together with YardNine have designed something unique, as we have come out of the pandemic thinking about workspace differently,” she explained.

“There is a greater desire to connect with nature and Edenica allows for that. Occupiers will be able to open the windows – that is a rarity in office assets – which will offer another way to connect with the outdoors.”

The location of the asset was also a factor in Cain’s decision to finance it. Edenica is close to Farringdon, Chancery Lane and City Thameslink rail stations, which provide access to London’s new Elizabeth Line. Yerolemou-Ennsgraber said Cain believes transport hubs have become ever more critical to the viability of office assets.

“What is key for us is the partnership with a quality sponsor like BauMont and that the building is developed close to important transport links and offers walkability, both for occupiers and their clients,” said Yerolemou-Ennsgraber. “The building should be as easily accessible as possible.

“Since the pandemic, people want to spend less time commuting, so the office they are commuting to needs to offer something that is worth that journey. The location, design and surrounding amenities add to what we consider a quality product. This, in combination with quality partners, positioned Edenica as an attractive opportunity to expand our reach in the office market.”