Real Estate News
Cornerstone Real Estate enters European property lending market
07 Aug 2012
EUROPE - Cornerstone Real Estate Advisers has entered the European property lending market, providing an £83m (€105m) loan to Derwent London secured on £172m of central London assets.
The deal is the first property lending deal in the UK for Cornerstone and part of its strategy of extending into Europe.
The facility was arranged by Laxfield Capital, which will also act as manager of the loan.
Charles Weeks, chief executive at Cornerstone Europe, said: "The completion of our first real estate debt transaction so soon after entering the UK market and with such a high-calibre partner as Derwent London is a significant achievement."
The UK debt business would sit well with Cornerstone's position in the lending field in the US, where it has a debt programme with more than $20bn (€16bn) under management, and in many aspects of property finance, he said.
Last year, the US commercial real estate debt platform did $5.7bn of property deals.
Derwent London's finance director Damian Wisniewski said: "This new long-term, fixed-rate loan provides us with a diversified source of funding at a modest all-in interest rate, taking advantage of the recent falls in gilt rates."
The financing deal also improved the company's debt maturity profile, he said.
The loan has a 12-year duration and is secured against two high-quality assets in Fitzrovia in London's West End, according to Cornerstone.
One is a 147,900 square-foot, seven-storey office building leased to engineering and design group Arup.
The other is a multi-tenanted block incorporating the 330-room Grafton Hotel and units let to McDonalds, Boots, Tesco and others, with an average weighted unexpired lease term of about 23 years.
Cornerstone, a subsidiary of US life company MassMutual, paved the way for its move into real-estate lending early last month by hiring Laxfield Capital to manage senior debt investments in the UK.
Nick Pink, CIO at Cornerstone Europe, said: "This transaction is a perfect example of the kind of deal we are keen to undertake in the early stages of what will become, over time, a broader strategy."
The company said it aimed to provide property-secured senior loans with single-property target lot size of £25m to £75m.
It said it believed its loans of 7-20 years were longer than those offered by most traditional banks right now.
Author: Rachel Fixsen