Meyer Bergman secures £85m Blackstone bridge loan ahead of repositioning Whiteleys

Meyer Bergman’s £115m purchase of Whiteleys, backed by a private family office of Brunei, will be financed by an £85m bridge loan by Blackstone, as planning proposals to reposition the famous shopping centre in Queensway are developed. 

Screen shot 2013-09-13 at 10.57.20Whiteleys, the 101-years old Grade II-listed former department store, has had a checkered recent history, standing vacant for much of the 1980s before redevelopment into a shopping centre, funded by Standard Life Assurance Company.

Eight years ago, the redeveloped Whiteleys was transferred into the Standard Life Investments UK Shopping Centre Trust, but efforts to successfully establish the asset as a profitable shopping centre have been only marginally successful at best.

Meyer Bergman completed the acquisition of Whiteleys in an off-market transaction yesterday, with Blackstone Real Estate Debt Strategies (BREDS) providing an £85m bridge loan for up to three years, as proposals are developed to substantially reposition the shopping centre upmarket.

The redevelopment of Whiteleys will include a capital expenditure programme of between £50m to £100m, CoStar News understands, with Meyer Bergman expected to submit planning proposals in around six months time.

Subject to planning approval, Meyer Bergman could seek to refinance the BREDS bridge loan into a development loan in around two years’ time, until which, the asset will continue to remain as it currently is.

Blackstone’s £85m bridge loan, which completed start to finish including credit committee approval in just one week, will be split into separate senior and mezzanine tranches, at the private equity firm’s choosing.

The senior is expected to be cut-off at £60m to £65m, depending where the margin will fall between 400 and 450 basis points, which is set to be syndicated.

The £20m to £25m mezzanine balance, priced at an internal rate of return of around 10%, will be retained by BREDS.

Rob Harper, managing director and the head of Europe for BREDS, closed the bridge loan with Meyer Bergman.

Blackstone sells £64m Old Spitalfields Market senior debt to Helaba

Two weeks ago, BREDS completed the syndication of the circa £64m senior debt secured by Ashkenazy Acquisition Corp’s Old Spitalfields Market to Helaba.

BREDS funded Ashkenazy’s £113m purchase of the Grade II-listed historic site last month with a £92m whole loan, split by a £64m senior loan, priced at less than 275 basis points, and £28m mezzanine loan, which carries an IRR of around 12%.

There is also a circa £2m payment in kind (PIK) component which is for capex to finance the planned asset management work, which will be supplemented by additional cash from Ashkenazy.

Ashkenazy won the bidding process to acquire Old Spitalfields Market, infamous in the 19th-century for a spate of Jack the Ripper murders, from Ballymore Properties at the end of May, and has sought to leverage the development-play asset aggressively.

Ashkenazy’s loan-to-cost for Old Spitalfields Market is 83.2%.

CoStar News understands that Ashkenazy is planning to considerably improve the tenant base of Old Spitalfields Market, with plans to upgrade the units – leased currently by a mix of restaurants, pubs, retailers and offices – to attract higher-end, higher-paying occupants.

Ashkenazy’s business plan targets a material increase in the aggregate rental income over the next two to three years, which in turn, would increase the value of Old Spitalfields Market and, subsequently, lower the LTV by the maturity of the five-year loan in July 2018.

Eastdil Secured arranged the financing tendering process for Ashkenazy, which drew a raft of term sheets, including from Starwood Capital, Goldman Sachs, Citigroup, Deutsche Bank, Och-Ziff and LaSalle Investment Management.

Old Spitalfields Market is Ashkenazy’s maiden UK property acquisition, although similar upside-focused investment strategies have been successfully deployed by the New York-based private real estate investment firm in the US, including the repositioning of Union Station in Washington DC.

All parties declined to comment.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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