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A joint venture between giant U.S. and Danish pension funds and WeWork has extended the maturity on a loan secured against a £590M City of London office complex that currently lies almost a third vacant.
The JV between TIAA subsidairy Nuveen, Denmark’s PFA Global Real Estate and the coworking giant has extended the loan repayment date on Devonshire Square to May 2023. It is the second time it has extended the loan and marks the last time it can do so.
There is currently £125M of debt secured against the scheme, a report from loan servicer Mount Street showed in February. The original loan used to purchase the 12-building campus totalled £235M, but last year the JV paid down £83M of debt to avoid breaching a debt yield covenant.
The loan servicer’s report showed that the current occupancy level of the scheme is 68%, compared to 89% in 2019. One of the largest tenants, the Devonshire Club, went into administration before the pandemic. In addition, WeWork did not expand to take vacant space at the scheme as was the intention when the trio bought the building for £580M in 2018.
Currently, WeWork pays 11% of the rent, Mount Street said, down from about a third at the start of 2021.
The coworking firm originally had a revenue-sharing agreement with TIAA and PFA, but that has now been converted to a standard 20-year lease at a rent of £60 per SF.
The total rent from the building is £11.6M, from 32 tenants, with a weighted average lease term of 4.86 years.
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