AEG and joint venture partner Crosstree Real Estate have approached lenders to find £185m of debt, part of which will be used to fund the development of their new retail project at The O2 in Greenwich, SE10.
The partners have appointed Eastdil Secured to broker the deal.
The loan request is at a loan-to-value ratio of close to 80% of the current £230m valuation of the site and the leisure within the O2. The loan request documents show that the partners estimate the development will increase that value to around £330m, which would reduce the LTV to 56%.
Of the £185m requested, £110m will be secured against the existing 397,000 sq ft of predominantly restaurants and bars at the venue, while the remaining £75m will be used as capex to fund the development of the previously unused parts of the former white elephant.
The loan will be serviced by an income stream from existing tenants and also in part by revenue from the 20,000-seat concert venue that occupies the majority of the site.
AEG originally partnered with Land Securities in early 2014 to explore the retail possibilities on the site. The six-month partnership agreement with Land Securities subsequently expired, allowing Crosstree to buy into the venture.
The deal to buy a 50% stake in the existing leisure and the development opportunities for around £100m exchanged last week and is due to complete early next month.
AEG has detailed planning permission from Greenwich council for the addition of 229,000 sq ft of retail space on top of the existing leisure offering, within an outline consent of 250,000-300,000 sq ft.
AEG has previously looked at opening up unused space on the ground floor to attract luxury retailers such as Louis Vuitton and Dior.
