Capital A Finance and Dragonfly Property Finance have written a £62.5m bridge facility to refinance a called-in Co-operative Bank senior loan, secured by a £100m-valued portfolio of prime residential central London owned by an offshore private family.
This is one of the first Co-op’s loans to be refinanced, following the UK mutual’s proposed recapitalisation strategy announced in June and which has led to the decision to call in loans in breach of covenants.
The Co-op’s precarious financial state – which admitted to a £1.5bn capital shortfall in June, following the six-notch downgrade of its credit rating by Moody’s in May – prompted the offshore private family to seek short-term financing, ahead of a longer term solution.
Such was the required speed and certainty of execution by the borrower, given the Co-op’s own problems, that a margin premium was secured for the bridge loan.
In addition, the offshore private family injected a small proportion of “hurt money” to recapitalise the central London residential portfolio.
Capital A has and Dragonfly are expected to tender for the subsequent investment loan, at more normal market levels, at the matuity of bridge facility.
Daniel Austin, chief executive of Capital A, said in a statement: “The last 12 months have been exceptionally busy for us, with an average of one deal closing every couple of weeks, and we are delighted to have arranged our largest refinancing to date.
“Our access to fluid capital from private sources, our team’s real estate expertise and our appetite to structure complex transactions put us in a unique position within the real estate debt market and we look forward to closing further transactions in the coming months.
“Our investments to date are broadly distributed across commercial and residential assets across London but we are also actively reviewing opportunities outside of the M25.”
Jonathan Samuels, chief executive of Dragonfly Property Finance, said: “Out of the 1,200 loans Dragonfly has advanced since inception, this loan was the largest we have completed.
“We have historically lent in excess of £20m as sole lender but Dragonfly also has a proven track record in working effectively with other lenders and this transaction demonstrates that.
“Due to the speed required for the refinance, the variety of assets, and the complex structures involved, this was an interesting challenge but one that both teams stepped up to the plate on.”
Capital A, the specialist real estate debt provider, has provided debt on 20 projects in the last 12 months.
In June, Capital A took a 50:50 share of a £25m mezzanine loan with LaSalle Investment Management in a wider £170m in development financing package for Gerald Ronson’s Ronson Capital Partners residential riverside development in Westminster.