Deutsche Bank has funded three deals inside the last two weeks, including two UK loans for Blackstone and Brockton Capital as well as the global investment bank’s first loan in Netherlands since the global financial crisis with private equity firm Victory Advisors.
Blackstone financed its March acquisition of Lacon House in Midtown for £90m, from German fund manager Deutsche Asset and Wealth Management, with a £65m five-year loan, priced at around 400 basis points over three-month LIBOR. Deutsche Bank’s loan puts Blackstone’s leverage at 72.2%.
The 220,000 sq ft building at 84 Theobald’s Road is considered a “mini Adelphi”-like investment play for Blackstone.
The three tenants – including law firm Nabarro which occupies more than half the Lacon House floorspace – are all expected to leave at their lease expiry in June 2014, enabling Blackstone to carry out light, quick refurbishment work to improve the rents achievable at Lacon House before the office is relet.
Deutsche Bank is considering a sale of around a £20m slice of the £50m loan, and is thought to have two or three interested buyers.
Blackstone acquired Lacon House for £5m less than the £95m sale price offered by joint venture partners Grosvenor and the Canadian Pension Plan Investment Board, before the bid collapsed. The £90m sale price reflects less than £420 per sq ft.
Deutsche Bank’s second UK loan is a bridge facility to planning permission for Brockton Capital’s mixed-used New Oxford Street redevelopment scheme.
Brockton Capital acquired the former Royal Mail depot on New Oxford Street in London from Aviva Investors for around £95m, financed with a £50m loan which expires when Brockton achieves planning permission from Camden Council to develop the scheme.
The dormant former Royal Mail depot, infamous for playing host to illegal raves in 2010, is expected to be converted into an office block, with ground level retail, and potentially a small component of top level residential.
Brockton Capital has only begun the planning application process with Camden council, and with the timeline uncertain, has agreed a two-year facility with Deutsche Bank, with an option for a further one-year extension. Alford Hall Monaghan has been appointed as the scheme’s architect.
When planing permission is granted, Brockton Capital is expected to refinance the bridge loan with a development loan from Deutsche Bank.
Completing the hat-trick of loans in the last two weeks is the global investment bank’s first loan extended in the Netherlands since the global financial crisis.
Victory Advisors, the private equity firm founded by former Blackstone managing director Erik Moresco and Edwin van Emmerik, acquired Amsterdam’s Atrium building for around €95m, financed with a €66m senior and mezzanine package.
Deutsche Bank extended a five-year €56m senior loan, with an effective 400 basis points margin inclusive of expected exit fees, and DRC Capital provided a €10m mezzanine loan.
Victory Advisors acquired Atrium, in Amsterdam’s Zuidas central business district, after Lloyds Banking Group enforced over the defaulted €160m loan which legacy bank HBOS extended to Derek Quinlan’s Quinlan Private to finance its €200m acquisition in 2007 from Tishman Speyer.
Lloyds’ sale at around €95m, implies a loss to the bank of around €65m.
In recent years, Atrium has suffered from a lack of capital expenditure and active management to keep the 1970s-built office block in pace with modern standards.
Victory Advisors is expected to pursue an intensive capital investment and active management program to return the asset to grade A fit-out.
Infrastructure improvements in the Zuidas district have begun this year, which will improve the orbital motorway and underground network, as the district matures into Netherlands premier business area.
Deutsche Bank declined to comment.