Brookfield Office Properties closed the financing of 99 Bishopsgate with ?150m five-year senior loan from a three-bank consortium led by Wells Fargo, which follows the US investment bank?s ?UK real estate lending strategy of financing major US clients in London.
Wells Fargo is thought to have taken a larger share than the two additional banks in the consortium, Santander and Aareal Bank, in what was a popular financing ticket with several banks also keen to have been part of the consortium in an effort to develop a relationship with Brookfield.
The ?150m five-year senior loan, which funded on 28 September, is thought to reflect around a 55% LTV, which implies the valuation on the 339,000 sq ft office tower is around ?270m.
Brookfield?s ability to secure competitive tenders from the banking market demonstrates traditional lenders willingness to follow prime clients even where there is leasing risk, Real Estate Capital reported yesterday.
The 26-storey City office tower, extensively redeveloped in 1995, is 62% occupied, of which 40% is to Deutsche Bank through to 2021. There is 100,000 sq ft that has been vacated by Deutsche Bank, which has been refurbished and Brookfield are looking for tenants to fill this lower-level space.
The loan pricing Brookfield agreed with Wells, Santander and Aareal Bank likely reflects this leasing risk which is thought to be around 350 basis points. Last month, Brookfield hired Montagu Evans? Martin Wallace as head of leasing.
All parties declined to comment.
Wells Fargo returned to UK property lending earlier this year, having closed at least three deals in the last six months, and has a building pipeline, which includes the refinancing of Westbrook Partners? 10 Dolphin Square, a legacy Wachovia loan.
Wells? current lending appetite is to finance London commercial real estate ? only against the bank?s existing clients, which are all US investors. Wells has turned down requests to lend outside London, including a prime hotel in Amsterdam, in line with this currently strict criterion.
Wells is purely a balance sheet lender, and is the largest US commercial real estate lender with a circa $130bn loan book. Wells? European exposure is entirely inherited from its October 2008 acquisition of Wachovia, with around a $1bn loan book.
In March, Wells refinanced the legacy Wachovia senior loan behind Westbrook Partners? Colonnade Walk, at 123 Buckingham Palace Road in Victoria, taking half of the ?100m five-year senior loan alongside MetLife, priced at around 275 bps over three-month LIBOR, reflecting a circa 60% LTV.
Wells? second deal so far was as part of a three-bank senior debt club ? with HSBC and Deutsche Pfandbriefbank ? to finance Blackstone?s circa ?300m 17-strong Project Triangle industrial portfolio, sold by majority owner London & Stamford, taking around a ?50m hold.
Aareal Bank is understood to be ready to rebalance it European property loan book with an uptick in UK property lending in the coming months, while Santander remains committed to UK property lending although the bank?s wider problems has decreased its total appetite and increased its costs of funding.
jwallace@costar.co.uk
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