ING REF to refinance Safra’s The Gherkin with £365m loan

Safra Group, the company controlled by Brazilian billionaire Joseph Safra, has secured a seven-year £365m senior loan with ING Real Estate Finance to refinance the initial all-cash acquisition of The Gherkin, CoStar News can reveal.

ING logoING was one of the lenders on the notoriously convoluted legacy capital structure and one of the creditors which took the collective decision to call in receivers over 30 St. Mary’s Axe in April.

Safra Group selected ING as the sole lender on the refinancing, which is expected to fund before the end of the year.  A syndication of part of the senior loan is expected to follow.

CoStar News understands that the pricing on the loan is sub 130 basis points over three-month LIBOR.

The Gherkin, officially called 30 St. Mary Axe, was sold to Safra Group by receivers Deloitte Real Estate for a gross price of £726m, which includes the net of two separate mark-to-market liabilities:  a negative liability from on the long-dated interest rate swap and a small positive liability for the currency swap.

The currency agreement stems from former owner IVG Immobilien’s allowance for anchor tenant Swiss Re to pay its rent in Swiss Francs.

Evans Randall, the boutique investment bank, and IVG, through its Euroselect 14 fund, jointly acquired 30 St Mary Axe for £630m in February 2007 from Swiss Re, the re-insurance giant, which remains the property’s largest tenant.

As has been reported widely, the loan was sliced into multiple tranches with a significant portion of the original senior financing drawn as an unhedged Swiss Francs loan.  IVG hedged interest payments on the loan but not the entirety of the principal loan itself.

A simplified refinancing of The Gherkin by one of the legacy lenders was considered a probable outcome, given the complex negotiations which the legacy lenders had to complete with the eventual new owner.

Not least this included negotiations over the interest rate swap mark to market breakage costs as well as positive mark to market on the currency swap which has grown in line with the appreciation of the Swiss Franc against Sterling.

Back in April, when the creditors called in the receivers, CoStar News wrote in an analysis piece at the time:  “In the circular nature of markets, through an eventual sale of the Gherkin, whether to a sovereign wealth fund or any of a host of core-type investors, the asset would be ironically an incredibly attractive financing mandate, possibly even including some of the very lenders which have agreed to call in the receivers yesterday.”

See the full article here.

All parties declined to comment.

About CoStar News

Finance Editor, CoStar News
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