Cornerstone strikes first UK lending deal

The Hartford, Connecticut real estate investment manager has provided an £83 million loan to a public London property company as its senior UK lending programme gets under way.

Cornerstone Real Estate Advisers has announced its first real estate lending transaction in the UK since partnering up with Laxfield Capital, a London-based firm started by former GE Capital professionals earlier this year.

The Hartford, Connecticut real estate investment manager has lent £83 million (€105 million; $120 million) to Derwent London, a public property company, against two prime central London assets valued at £172 million. Providing details of the loan, Cornerstone said it was providing the borrower with a new 12-year, fixed-rate facility secured against a 147,000-square-foot office at 2-8 Fitzroy Street in London’s West End and a multi-tenanted block fronting Tottenham Court Road, Warren Street and Grafton Way.   

The loan was arranged by Laxfield Capital, a London-based outfit established by Adam Slater and Emma Huepfl, which is helping Cornerstone originate and manage loans in the UK. News of that partnership was released at the beginning of July, signaling its intention to join the growing throng of real estate investment firms expecting to capitalise on a lack of senior debt in Europe.

“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,” said Nick Pink, chief investment officer of Cornerstone Europe. “In this case, we were able to work with a top-tier sponsor willing to expand and diversify its pool of lenders, which enabled us to lend against grade A assets with long-term, high-quality income streams able to support an extended timeframe to maturity.”

Charles Weeks, chief executive officer of Cornerstone Europe, added: “The completion of our first real estate debt transaction so soon after entering the UK market…is a significant achievement and clearly demonstrates our intention to put Cornerstone at the forefront of the senior lending market in Europe.”

The revelation comes a few weeks after Robert Little, chief investment officer at Cornerstone Real Estate Advisers, told PERE in a feature on debt funds that he was seeing “steady demand” from investors for both funds and separate accounts. In addition to managing a separate account for the Los Angeles County Employees Retirement Association, the firm also announced in April a final close on $315 million for its Cornerstone Enhanced Mortgage Fund. Both the fund and the separate account are investing in first mortgage debt, with about half of the capital from the two vehicles now invested or committed.