Starwood Capital Group, the Greenwich, Connecticut-based real estate investment firm, reportedly is stepping in to provide £250 million (€294 million; $379 million) to refinance the debt behind the landmark Heron Tower in central London.
According to the Financial Times, Starwood has entered into talks with the developer of the 46-story skyscraper and the Middle East consortium that has backed it. The development of the Heron Tower was financed with a £370 million loan offered by German banks Hypothekenbank and Landesbank Hessen-Thüringen, of which £300 million was drawn, according to the report.
Starwood has been looking to put capital to work via its various debt strategies in both the US and more recently in Europe. In November, the firm launched a fund called Starwood European Finance – or StarFin for short – with Cushman & Wakfield Investors as backers and went on to raise £228 million through an initial public offering on London’s stock exchange.
At the time, Starwood said: “The new company will focus on the UK and northern parts of Europe and will follow a ‘broad loan origination business’, lending directly to property owners as well as acquiring parts of loans made by other lenders. It will invest across a combination of senior, whole, subordinated, bridge and development loans with a maximum portfolio loan-to-value ratio of 75 percent. Typical loan sizes will be from €40 million for whole loans and from €20 million for subordinated loans, though it could enter into larger loans across the industrial, office, retail and residential sectors.”
StarFin opened its account in January by participating as one of three partners behind the £147 million mezzanine portion of a £547 million refinancing of the Maybourne Hotel Group, a London-based hotel company which owns landmark hotels Claridge’s, the Connaught and the Berkeley.
The Heron refinancing is not the only high-profile example of non-traditional debt capital coming into the UK and Europe of late. Earlier this month, New York alternatives group Apollo Global Management along, with Deutsche Bank, emerged as a party behind the £600 million refinancing of The Blackstone Group’s Chiswick Park in London. Deutsche advanced a new £400 million senior loan facility, while Apollo provided a £200 million mezzanine facility on behalf of a separate managed account. In that case, Blackstone originally bought the asset for around £480 million.
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