M&G Real Estate Finance has provided Rocket Investments, the specialist developer in London's Shoreditch area, with financing for its circa £100 mln (€116 mln) development let to hotel group Premier Inn.
M&G is providing a £70 mln (€81 mln), five-year whole loan to Rocket, secured on the former print work office building at 10 East Road in London's tech hub on the edge of the City of London.
The property company redeveloped the building which now has 252 beds and is let to Premier Inn for 20 years. It is adjacent to a 16-storey student accommodation block, also developed by Rocket and designed by Lifschutz Davidson Sandilands, which was acquired by iQ, now owned by Wellcome Trust, Goldman Sachs and Greystar. This asset was also originally financed by M&G, in 2012.
Dan Riches, a director in real estate finance at M&G Investments, said: '10 East Road is in a desirable part of central London and has a secure income stream from the long-lease in place with Premier Inn.
'Institutional investors are interested in commercial mortgages as an attractive alternative to bonds as they offer a good relative value for secured risk. The entire whole loan will be invested and held by funds managed by M&G.'
M&G Real Estate Finance invests for both separate accounts and debt funds and can provide senior, junior or whole loans, in the UK and continental Europe. Its current debt funds are likely to be fully invested this year and the manager is expected to be raising follow on capital.
M&G has invested almost £6.5 bn in commercial mortgages and likes alternative investments such as student housing and hotels as well as more mainstream assets. Late last year the business financed a £196 mln Travelodge budget hotel portfolio for Secure Income REIT.
Rocket Investments has developed a portfolio of residential and commercial schemes in this part of the UK capital. Its largest by value is the Atlas Building on City Road, a 40-storey residential tower which completes next year and was financed with around £160 mln of senior debt provided by Lloyds, Industrial & Commercial Bank of China and Bank of East Asia plus some £80 mln of mezzanine from Urban Exposure, and US investors Highbridge and Related Companies.
