Speculative Development Lending Returns To London With £450M Duo Of Deals

Courtesy of MTD
One Crown Place

You wait ages for a speculative development loan to turn up, and then two come along at once.

Given the uncertainty around the London economy, speculative development finance is a rare beast in the U.K. capital.

But two deals totalling £460M have now been struck in the past fortnight.

Giant Australian pension fund AustralianSuper has teamed up with TH Real Estate to provide £280M of development finance to fund the £500M development of One Crown Place, a mixed-use scheme where the City of London meets Shoreditch.

The 370K SF development will have 136K SF of office space, 7K SF of retail, a 41-bed boutique hotel and 246 luxury residential units. It is being developed by Malaysian developer MTD, which bought the scheme in 2013.

It is AustralianSuper's first real estate loan in the U.K., and the fund has also appointed TH to find other lending opportunities in major European cities. It wants to provide development or mezzanine finance of more than £100M.

“The One Crown Place transaction strongly aligns with our real estate debt strategy to target high-quality opportunities secured against institutional assets in top-tier locations in European cities,” AustralianSuper Head of Mid Risk Jason Peasley said in a statement.

CBRE Capital Advisors advised MTD. One Crown Place is scheduled for completion in 2020.

Elsewhere on the fringe of the City, Starwood Capital is providing a £180M development loan to fund the 325K SF One Braham office tower in Aldgate, according to CoStar.

Developer Aldgate Developments appointed Eastdil Secured to find finance for the £350M development last year, CoStar reports.

Aldgate Developments built the next door Aldgate Tower speculatively in 2014, and the building is now full, and the firm is looking to repeat the success.

According to CBRE’s European debt map, the U.K. is the only major country in Europe where the cost of debt is rising. Development finance is available at loan-to-value ratios of 70% at a cost of 4%, CBRE said.

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