UK-focused real estate manager Delancey has completed a £15.7m senior secured loan to ZCS 2 to support its acquisition of a prime office building in London.
Delancey said it has provided a two-year, bridge-type whole loan to the vehicle led by Zero Carbon Space – a NorthStar Capital and LandCap development platform that aims to acquire and retrofit existing environmentally poor office buildings.
The loan facility, made via Delancey’s credit fund DCIF, will support ZCS 2’s purchase of 2 Hosier Lane, a 41,713sqft freehold office asset in Farringdon.
The initial loan term is due to expire in late 2025 to coincide with tenant Travers Smith’s lease expiry – at which point the loan will be repaid via a development finance loan from a third party.
ZCS 2, which focuses on delivering “best-in-class net-zero-carbon office space in central London” intends to carry out a comprehensive refurbishment of the property upon vacancy and once planning permission has been achieved.
This is the second financing agreement that Delancey has completed with this sponsor, having previously closed a senior secured three-year, fixed-rate £19.5m facility to assist ZCS with the acquisition of 105 Jermyn Street.
Martin Farinola, head of real estate strategies at Delancey, said: “We continue to have high conviction in central London offices, as demonstrated by our recent financing activity and remain relationship-led in our approach, so are pleased to be working with a high-quality sponsor like ZCS 2 on a second acquisition.
“The polarisation taking place within the office market is causing many lenders to withdraw entirely, creating an opening for us to step in. However, we see the shift towards private debt being structural and not purely cyclical, and real estate credit as a whole, will be a longer-term strategy for us.”
Farid Alizadeh, a director at ZCS, added, “Farringdon provides another opportunity to add to our growing portfolio of central London offices.
“We value our ongoing relationship with Delancey and trust their expertise in structuring deals that support our ambitious growth plans of acquiring £500m of central London offices within the next 24 months.
“It is a real joy to work with a lender who also has a sophisticated background in understanding the dynamics of investing in central London. Delancey as always were quick, honourable and a pleasure to work with.”
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