Starwood Capital has refinanced a matured speculative development loan secured by the partially-complete Aldgate Tower in the City of London with a £200m whole loan.
Aldgate Developments, a privately-controlled Irish developer and investor, has refinanced a £85.5m two-and-a-half-year development loan from Helios Capital and GWM Group six months ahead of maturity.
CoStar News understands that Helios Capital and GWM Group was repaid around £110m, comprised of £85m of the drawn facility and £25m in interest and fees, implying a 30% return for the 50:50 split Helios Capital and GWM Group loan.
Starwood has divided the fresh whole loan between its $6bn Starwood Property Trust and Starwood European Real Estate Finance, the circa £250m listed real estate debt fund, which provided £45m of the overall £200m facility.
In a statement, Starwood European Real Estate Finance confirmed that the £200m loan is part floating, part fixed.
While no leverage was confirmed, if this loan is typical of Starwood’s lending criteria of mid 70s loan-to-value, it would imply an upward valuation re-assessment of the 317,000 sq ft 18-storey tower at 10 Whitechapel High Street to around £265m.
No margin was confirmed for the £200m whole loan, but more broadly speaking, pricing on development finance has narrowed to the high single-digit range.
In the brief RNS statement, Starwood stated: “The facility will support the acquisition and stabilisation through lease-up of the property.”
Aldgate Developments, run by Oisin Quinn and Paul Molloy and backed by Peter Gleeson and William Gleeson, is under offer to secure its maiden pre-let at Aldgate Tower with Tag Worldwide, a marketing company, which is looking to take almost 40,000 sq ft.
Less advanced are negotiations with Uber, the app-based taxi agency, for 40,000 sq ft and BskyB for a further 30,000 sq ft, but these deals are thought to be less certain to conclude.
Aldgate Developments also owns the adjacent Maersk House, formerly named Beagle House, and is planning a 24-storey residential-led mixed-use scheme over 320,000 sq ft, taking the Irish developer’s combined commercial space in Aldgate to just over 650,000 sq ft.
In a report submitted to Tower Hamlets Development Committee in April, Aldgate Developments wrote: “The recession has resulted in a wholesale restructure of the office demand market, which has meant that Aldgate is no longer considered by the market to be an office destination resulting in an oversupply of offices in this location.
“While Aldgate Developments are now constructing Aldgate Tower, the occupation of this office development is dependent on an ability to deliver their residential-led vision for the Beagle House site and therefore helping to change the perceptions of Aldgate so that in future it becomes a mixed-use sustainable hub with significant public realm provision at a key location to the east of the City.”