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The year has gotten off to a strong start for players in alternative real estate sectors looking for debt, with nontraditional lenders providing £500M across a trio of deals.
In the largest deal, Morgan Stanley has provided a £350M loan to London & Regional secured against a portfolio of UK hotels, which will now be securitised.
London & Regional bought the Atlas Hotels portfolio from Lone Star for £575M in April last year. It consists of 49 hotels across the UK, mainly operated under the Holiday Inn Express brand. The size of the loan puts the loan-to-value ratio at about 60%.
Elsewhere, Allianz has provided a £120M loan to The Office Group to fund the purchase and refurbishment of Chancery House in Holborn, in a deal that shows a vote of confidence in the London coworking sector and one of its biggest operators.
TOG, which is majority-owned by Blackstone, bought the 150K SF building for a little over £100M last year. The fact that Allianz has lent substantially more than the purchase price shows that it has confidence that the value of the building will rise significantly once it has been refurbished and TOG is operating it as a flexible office space.
Lastly, pension and insurance company ReAssure has provided a £40M loan to Target Healthcare REIT, secured against existing assets, with £10M available for new investment. The loan runs to 2032 and has an interest rate of 3.3%.
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