A German institutional investor, advised by Deutsche Asset & Wealth Management (DeAWM), has provided mezzanine finance on a prime London office property.
Mumbai-based developer Indiabulls Real Estate bought the central London asset – 22 Hanover Square – from Scottish Widows Investment Partnership (now part of Abedeen Asset Management) in June for £155m.
DeAWM said it had financed the acquisition with Deutsche Pfandbrief. Its German institutional real estate business, RREEF Spezial Invest, had acquired the mezzanine loan on behalf of an institutional client.
In May, RREEF Spezial Invest acquired a loan backed against another London property – 1 Queen Anne’s Gate Buildings – on behalf German pension fund Rheinische Versorgungskassen. DeAWM were not able to confirm whether the 22 Hanover Square deal was for the same client.
The Queen Anne’s Gate property in Westminster sold for £43m. At the time, Andrea Vanni, DeAWM’s head of European real estate debt investment, said the financing was in line with its strategy to provide “higher leverage against quality assets across the UK and Europe”.
With lenders unlikely to go above 65% loan-to-value ratios, the mezzanine market is increasing as larger ‘big ticket’ trophy properties trade, observers told IP Real Estate.
The Hanover Square property, formerly the headquarters of property agent JLL, was expected to sell for £130m when first put on the market in April this year via an auction process.
JLL, although no longer a tenant of the asset, has a lease running until 2017 on the 87,000sqft building, which is close to the entrance to London train link Crossrail, due for completion in 2018.
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