One of London’s most expensive residential developments is being lined up for a £200m refinancing, in a move that will test lender appetite for the luxury London market.
Wainbridge has hired US real estate investment bank Lotus Capital Partners to secure new debt against 11-15 Grosvenor Crescent, SW1, an 11-apartment “super prime” development that completes imminently.
Around £200m of existing development finance debt is due to mature in December. The bulk of this is in the form of a £163m senior debt facility, LetterOne, with a minority portion from Urban Exposure.
LetterOne is backed by Russian oligarchs Mikhail Fridman, German Khan and Alexei Kuzmichev. The remainder of the existing debt is in the form of a mezzanine loan from a club of high-net-worth individuals.
Of the 11 flats at the Flanagan Lawrence-designed 11-15 Grosvenor Crescent, each worth upwards of £30m, one has been sold off plan.
Grosvenor Crescent site was acquired for £114m by Russian-backed Wainbridge in December 2013, during the boom in prime and super prime residential. At the time a gross development value was envisaged by Wainbridge of £350m or £4,375 per sq ft.
A source close to the asset said: “The developers are not under pressure and it is normal for sales at this level to take place only after completion and for refinancing to take place on completion. The sale that has taken place is far in excess of the per sq ft numbers originally envisaged, so it should represent an attractive proposition for lenders.”
With the scheme nearing completion, the new finance is expected to be cheaper than the construction finance that was put in place during the relatively high-risk and complex redevelopment process of the Grade II listed building.
Savills said in April that prices for properties valued at more than £10m had fallen by a little over 15% since the 2014 peak of the market. It also predicted that prime central London sales volumes would remain broadly flat for the next two years as the market continued to adapt to the higher transactional costs incurred by stamp duty, and uncertainty caused by Brexit negotiations.
Wainbridge Capital raised its first capital in 2010, creating a fund backed by several high-net-worth Russian investors. Co-founders Rob Rackind and Edouard Fernandez both left the company in 2015 to join Swedish private equity firm EQT, later taking three other members of staff to join the same team.
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