Starwood European Finance has deployed approximately £264m of capital through four separate financing transactions in the last two weeks through three separate pools of debt capital taking its total deployment to £1bn throughout Europe.
The largest of the four is a £101.75m first mortgage loan construction loan for the development of Baltimore Wharf, a 46-story residential tower and 18-story housing development containing a total of 366 private residential and affordable housing units.
Frogmore Real Estate, together with development partners Galliard Homes, C J O’Shea Group Ltd and LBS Properties acquired the second phase of the Baltimore Wharf development in London’s Docklands, from the Ballymore Group for £30m in January 2013.
The £200m development is comprised of Baltimore Wharf, alongside an immediately adjacent site for the development of a 28-storey hotel, a serviced apartment tower and a separate 17-storey building consisting affordable housing units. The hotel site is not part of the Starwood financing.
Starwood European Finance has committed £86.75m, through Starwood Property Trust, and a further £15m through private funds managed by Starwood Capital Group.
Starwood, who priced the construction loan on an IRR-basis without commitment fees and non-utilisation fees, saw off competition from a number of UK clearers. The loan-to-cost of the Starwood facility is in the mid-to-upper 60% range, while the duration is three years and three months.
Urban Exposure has served as a key transaction adviser, contributed as a minority lender in the facility and been appointed facility agent.
Starwood’s second commitment announced this morning is a €99m broadly 50:50 investment loan and capex facility extended to Liran Wizman, a highly experienced hotel owner and key shareholder in pan-European hotel management company Grand City Hotels, and secured by a new W branded hotel located in the center of Amsterdam.
Starwood has originated the €99m facility pari passu the allocation as follows: Starwood Property Trust will provide €58m of the loan, SEREF will provide €25m and private funds managed by Starwood Capital Group will provide €16m. The loan, which funded at the end of last week, has a term of two years with a one-year extension option.
Slated to be completed in the third quarter of 2015, the refurbished hotel is based in Spuistraat, a prime location within the city that provides easy access to transportation links and attractions including the Royal Palace and Dam Square, which the hotel adjoins. Property finance boutique Buchler Barnett Spencer acted as advisor for the sponsor.
“Funding two high-profile commercial real estate projects such the development of Baltimore Wharf and the refurbishment of the W Amsterdam reflects the depth of our lending platform in Europe and our ability to continuously source attractive financing opportunities outside of the United States,” said Jeff Dishner, senior managing director and global head of real estate acquisitions at Starwood Capital Group.
The third loan is a €27m refinancing of First Central 200 a new, seven-story, 164,000 sq ft office building located within West London’s Park Royal business district, at Hanger Lane, to Wainbridge Global Opportunities London and a real estate fund of funds managed by Morgan Stanley
The co-investors recently invested substantial capital to complete the building’s finishes, including the lobby, elevators and floors.
The property is currently 45% leased to Bechtel Limited, the UK subsidiary of Bechtel Corp, a global leader in engineering, procurement, construction and project management.
In addition, SEREF, along with private funds managed by Starwood Capital Group, topped up an existing five-year senior loan by €36.1m to €71.4m to M7 Real Estate Ltd, an experienced multi-jurisdictional operator of multi-tenanted light industrial properties, and Bayside Capital, a credit-oriented investment firm.
The latest financing is the second increase to the facility, and serves to facilitate the joint ventures acquisition of nine additional light industrial properties throughout the Netherlands, bringing the total number of assets in the portfolio to 28.
M7 Cortona, the Dutch asset management arm of M7 Real Estate, is providing its industry-leading asset and property management services to the portfolio.
“We are pleased to provide flexible financing solutions that will allow high-quality borrowers to carry out their business plans on strong real estate,” said Peter Denton, Head of European Debt at Starwood European Finance in a statement.
“These financings demonstrate our commitment to working with sponsors as they execute their investment strategies across Europe. Our ability to quickly and thoughtfully deploy capital when attractive, incremental opportunities present themselves makes Starwood European Finance a lender of choice in Europe.”
Starwood European Real Estate Finance (SEREF), the UK-listed real estate debt fund, is now fully invested.
For SEREF, the focus is now on delivering predictable, continued dividends which match its investment objectives of 7p per share on a quarterly basis. Part of this focus will be to ensure there is sufficient pipeline of new deals to mitigate the impact of cash drag to ensure shareholders receive expected dividends.
Last quarter, SEREF delivered a 5p dividend equivalent, due to the impact of cash drag on a quarter by quarter basis.
Starwood European Finance is expected to return to the capital raising trail from the fourth quarter.