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Apollo Goes On £2B London Lending Tear

The new Whiteleys scheme

Who says there are no opportunities for private equity firms in London right now? There may be no distressed deals for PE firms to get their teeth into, but Apollo Global Management has lent almost £2B against London real estate assets in the space of just six months. 

Apollo has provided a £206M loan to fund the £295M purchase of the Alban Gate office building in the City of London, according to React News. Blackstone is selling the 382K SF office building to U.S. hedge fund King Street Capital and London-based asset manager Arax Properties. The size of the facility puts the loan-to-value ratio at about 70%. 

It is the latest in a string of London financings, secured against developments and existing assets, in multiple sectors. Apollo has various pots of money from which it can lend, including dedicated property funds, debt funds and insurance companies it owns. 

The largest loan it has underwritten is the £850M facility provided to Meyer Bergman and CC Land to fund the redevelopment of the former Whiteleys department store in Queensway, west London, into a new mixed-use scheme comprising apartments, retail, a hotel, a spa and a cinema. The scheme will cost a total of £1.25B, with Hong Kong’s CC Land providing at least £182M of equity. 

Also on the development side, Apollo provided a facility of around £100M in July to fund Orion Capital Management’s £200M purchase of the former BT headquarters in the City of London near St Paul’s Cathedral, which Orion will redevelop.

In terms of standing assets, Apollo was willing to lend capital into the retail sector where others fear to tread. In December it provided a £310M loan to Sir Philip Green’s Topshop to refinance the 90K SF building on Oxford Street that houses the retailer's flagship store. The building is valued at around £500M and also houses a flagship Nike store and a Vans store. Apollo provided a four-year loan. 

In the hotel sector, Apollo provided a £137.5M loan to refinance the Standard hotel in King’s Cross in November. The hotel was developed by Crosstree Real Estate, which converted a former annex of Camden Town Hall into a boutique hotel operated by U.S. hotelier André Balazs. Apollo said the loan was from one of its permanent capital vehicles. 

Also in November it participated in a financing of Brookfield’s £700M London Wall Place City of London office scheme. Its participation in the debt facility is likely to have totalled around £300M. 

For everything you need to know about the transformation of capital markets, come to Bisnow's London Investment Agenda Event on 25 February.