Omni Capital, the specialist lending subsidiary of Christian Candy’s CPC Group, has financed the Abu Dhabi-controlled Palace Real Estate Partners’ circa £160m acquisition of 1 Palace Street on Buckingham Gate from Delek Global Real Estate with a 12-month £127.5m bridge loan.
The short-term facility is thought to reflect an 80% loan-to-cost, from which the £160m sale price is inferred, and is thought to be priced at between 7-9%, which is consistent with market pricing for bridge loans at this leverage attachment point.
Palace Revive Limited, the vehicle established by Palace Real Estate Partners which is connected to Abu Dhabi Capital Management, received planning permission at the end of last year to convert 1 Palace Street on Buckingham Gate, a grade II-listed 19th century former hotel, into 78 high-end apartments with a restaurant and health centre.
The short-term facility offers time to progress the planned residential conversion of the asset, including the negotiation of construction contracts and finalising architects designs.
Once these contracts are in place, Palace Real Estate Partners is expected to seek full development financing.
Eastdil Secured arranged the financing for Palace Real Estate Partners.
The new scheme will involve the part refurbishment and part demolition of the existing listed building and apartment sizes will range from 800 sq ft to over 5,000 sq ft. Northacre, also owned by Abu Dhabi Capital Management, will be the development manager.
Omni Capital has around £1bn to lend in bridge, mezzanine and whole loans, having completed around £250m in lending deals over the last 18 months.
“This marks the first of many transactions as Omni Capital starts 2014 and moves into larger ticket deals,” said Colin Sanders, CEO of Omni Capital in a statement.
“Extensive knowledge and expertise in all aspects of property and development, especially on deals of this size, combined with Omni’s financial structuring capabilities, enables fast and substantial in-house development funding for experienced investors and development professionals.”
Omni Capital is seeking to capitalise on what it sees as “the ongoing liquidity gap… for developers and individuals alike and with a high demand for short-term products. Omni Capital is well positioned to fill the gap by lending where the banks will not”.