The owners of Devonshire Square have been given a two-year extension on a £336m loan secured against the EC2 campus, which was scheduled to mature today.
US private equity firm Rockpoint and the Abu Dhabi Investment Authority now have until 23 April 2013 before the debt matures, ending speculation that the building will soon be put up for sale.
As part of the loan extension, the owners have agreed a business plan to address tenancy issues at the 600,000 sq ft estate, which comprises 12 buildings. It was bought by Rockpoint for £410m in October 2006 before it sold a 25% stake to ADIA for £110m.
The last valuation of the building was £267m.
Insurance company Aon, which accounts for close to half the £20m annual rental income, is set to move out in 2014 and take space at British Land’s and Oxford Properties’ Cheesegrater scheme on Leadenhall Street, EC3.
As part of the loan extension, the borrowers are injecting £3m equity “in order to finalise and secure certain tenancy agreements”, including the re-gearing of a lease at a higher rental level and a new 25-year lease to another tenant.
The business plan also includes a “covenant by the borrowers to market the Devonshire Square property or otherwise refinance the Devonshire Square loan by no later than 22 April 2013”.
The extension comes after a year of talks between the owners and loan servicer, Morgan Stanley Mortgage Servicing.
bridget.o’connell@estatesgazette.com
