M&G and AXA snap up bank debt on Mayfair office trophy
M&G Investments and AXA Real Estate have acquired the debt used to finance the acquisition of Queensberry House in Mayfair by an Italian buyer last month.
Rome-based fund manager Sorgente Group paid £167m for the Old Burlington Street building, financed with £97.5m of debt from Deutsche Bank.
Deutsche Bank, which has an existing relationship with the Italians, sold on the loan to the two insurance groups.
The multi-let asset is a slightly unusual investment for the insurers in that although the location is prime, there is letting risk, with three of the tenants free to move in the next 18 months.
This is understood to be reflected in the margin on the debt, thought to be close to 400 basis points. Both M&G and AXA were said to be keen to take the whole deal but agreed to take half each.
M&G and AXA have been two of the leading originators and participants in large loan deals in the last year and their half shares in the Queensberry House senior represents a relatively small investment for them.
M&G Investments has invested more than £1.2bn in senior lending in that period and has started capital raising for a £1bn+ senior debt fund. AXA is tipped as the front-runner to buy a large portfolio of French and German performing loans from Societe Generale with a total par value of €1.2bn – but also continues to look at UK opportunities.
Tenants in 240,000 sq ft Queensberry House include property companies Hines, Evans Randall and Wainbridge. The building was sold by Aviva Investors, advised by Knight Frank, and buyer Sorgente said the acquisition was “the start of a strategic move” to acquire more property in the UK.
Sorgente’s funds have traditionally invested in the US and Switzerland as well as Italy.
Deutsche Bank has been very active in the last six weeks, closing half a dozen similar transactions, including another Mayfair project: refinancing Brockton Capital’s 56 Curzon Street, a residential development. The bank is also financing 20 Grosvenor Square which is to be redeveloped as luxury residential by the state of Qatar and Richard Caring
Jane Roberts, editor