Canary Wharf Group has sealed an £820m funding deal that will kick-start the next 4.9m sq ft phase of the iconic estate.
The agreement is the first major exercise completed under the company’s new owners, Brookfield and Qatar Investment Authority, following the £2.6bn acquisition of the company last month.
Lloyds Bank, Barclays, HSBC and Qatar National Bank have jointly provided £620m to bring forward 1.6m sq ft of development at the site previously known as Wood Wharf, E14.
It is part of a push by Canary Wharf’s management to change the feel of the traditional business complex by establishing a new residential-led district. A further £200m loan was signed off by the Homes & Communities Agency in March to establish the infrastructure for the entirety of the project.
The first phase, which is estimated for completion in 2019, will include around 1,600 new homes totalling 1.2m sq ft. Units will be split between for sale, private rent, intermediary rental and affordable homes across six or seven buildings.
It will also include up to 100,000 sq ft of shops and leisure and 300,000 sq ft of offices across two buildings, one of which will be speculatively developed and house tech occupiers that outgrow Canary Wharf Group’s current incubator space, Level39.
The project as a whole will create close to 3,200 new homes, around 25% of which will be affordable.
Brookfield and QIA are pushing to unlock the value tied up in Canary Wharf Group’s development pipeline as the firms paid a significant premium to Canary Wharf’s net asset value on the basis they could extract growth from its planned 11m sq ft of development.
There is also a desire to get ahead of potential competition from Riverside South, the JP Morgan-owned site on Canary Wharf that is currently being offered for sale with the potential for residential or mixed-use development.
The deal is one of the largest development financings agreed this cycle and is a sign of the rude health of the debt market. The five-and-a-half year loan has been agreed at a margin of just over 300bps.
The club of banks financing Wood Wharf is the same group financing the development of the residential element of the Shell Centre on the South Bank, SE1, with a £450m loan. The 877 homes are being developed by Braeburn Estate – a joint venture between Canary Wharf Group and Qatari Diar.
