Here’s a good story here about Westfield and its £550m financing deal for the half of the £1.45bn Stratford City shopping centre deal it owns from our finance editor at CoStar.
Some great info from James about how the deal works, which again reveals Westfield to be one of the shrewdest developers around.
Westfield, the Australian property developer, is expected to close a circa £550m five-year senior debt finance package for its Stratford City shopping centre with a consortium of three banks by the end of August.
Eurohypo, HSBC and Credit Agricole CIB are the joint lead arrangers on the finance and will underwrite a third of the deal each, at around £180m.
Pricing on the debt is thought to be around 225bps to 250bps over LIBOR, with either an increased provisional margin during tail end of construction and until near full occupancy is reached or alternatively Westfield will not draw down the debt until construction is finished and full occupancy is achieved.
The club deal is expected to reflect a leverage in the low 50s LTV. Savills has been appointed by Westfield to carry out a valuation of the shopping centre, assuming full occupancy at desired rental levels. The gross development value of the east London shopping centre is £1.45bn.
The bankers are “locked in rooms with lawyers as we speak with everyone aiming to close the deal within the next three, maybe four, weeks”, said a person familiar with the deal.
The total cost of the financing for Westfield, assuming it is fixed against the five-year swap rate, which as at yesterday was 2.05%, will be around 4.3% to 4.55%.
The three banks are expected to hold a final hold of around £50m to £75m.
The remainder will be distributed through a co-ordinated sell down into the syndication markets, with the German pfandbrief-funded banks and real estate debt funds the likely partners. Possible syndication partners include Deutsche Pfandbriefbank, DekaBank and Heleba as well as funds like AXA Real Estate Investment Managers’ Commercial Real Estate Senior 1 fund.
This process is already under way with around a dozen potential debt investors having approached or been approached by the three banks’ syndication teams, with preference for between four and five investors which are able to take close to a £75m-sized position.
The interest in the shopping centre debt finance has been considerable, because of its near full occupancy even at prelet status in a major geographical location for London in a part of the capital which is benefiting from huge regeneration.
The 1.9m sq ft shopping centre is adjacent to the Olympics site and is due to open in mid-September and as at May was 79% prelet to tenants including anchors John Lewis with Waitrose, as well as Marks & Spencer, New Look, Reiss and Hugo Boss.
Westfield and all banks declined to comment.