03. August 2012 
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Cornerstone provides £83 million loan to Derwent London
Cornerstone Real Estate Advisers has completed an £83 million refinancing for Derwent London plc, secured against two prime central London assets valued at £172 million. The facility was arranged by Laxfield Capital, who will also act as Manager of the loan.
The deal represents Cornerstone’s first real estate lending transaction in the UK and is in line with the Company’s strategy of extending into Europe its U.S. commercial real estate debt platform, which completed $5.7 billion in real estate transactions in 2011. Cornerstone is providing Derwent London with a new fixed rate, 12-year £83 million loan. This new financing package is secured against two high quality assets in the Fitzrovia sub-market of London’s West End: a 147,900 sq ft, seven storey landmark office building at 2-8 Fitzroy Street, W1, which is fully leased to leading international engineering and design group, Arup; and a multi-tenanted block fronting Tottenham Court Road, Warren Street and Grafton Way, which incorporates the 330-room Grafton Hotel, which is let to Edwardian International Hotels Ltd, operating under its Radisson Blu brand, together with a parade of 11 ground floor retail and restaurant units, let to tenants including McDonalds, Boots, Tesco, William Hill and Ask Restaurants. The average weighted unexpired lease term is approximately 23 years. Laxfield Capital originated, helped structure, and negotiated the deal on behalf of Cornerstone, following its appointment last month to source and manage loans for Cornerstone in the UK.
The deal is typical of the type of opportunity Cornerstone is targeting in the UK, where it is seeking to provide property-secured senior loans, with a single property target lot size of between £25 million and £75 million. Cornerstone offers loan maturities ranging from seven years to as many as 20 years, which it believes are longer than those currently offered by most traditional bank lenders. The launch of the Company’s UK lending business builds on Cornerstone’s existing U.S. commercial real estate debt platform, which originated more than $4 billion in commercial mortgages during 2011, secured by circa $6.5 billion of real estate assets.
Commenting on the transaction, Charles Weeks, CEO of Cornerstone Europe, said: “The completion of our first real estate debt transaction so soon after entering the UK market and with such a high calibre partner as Derwent London is a significant achievement and clearly demonstrates our intention to put Cornerstone at the forefront of the senior lending market in Europe. This will complement the already established position in this field in the U.S., where we have a debt programme with more than $20 billion of assets under management, in multiple facets of real estate finance.”
Nick Pink, CIO of Cornerstone Europe, added: “This transaction is a perfect example of the kind of deal we are keen to undertake in the early stages of what will become, over time, a broader strategy. In this case, we were able to work with a top-tier sponsor who was willing to expand and diversify its pool of lenders, which enabled us to lend against grade A assets with very long term, high quality income streams which are able to support an extended timeframe to maturity.” Damian Wisniewski, Finance Director at Derwent London, commented: “We are delighted to welcome Cornerstone as a lender to Derwent London. This new long-term, fixed rate loan provides us with a diversified source of funding at a modest all-in interest rate, taking advantage of the recent falls in gilt rates. It also enhances our debt maturity profile and adds an important name to our established pool of lenders.“
Adam Slater of Laxfield Capital commented: “This is just the sort of launch we hoped for Cornerstone’s UK lending programme. Derwent is a first rate sponsor, and Cornerstone won their confidence that it could deliver, working smoothly to execute in the agreed timescale. We now look forward to finding more good business to fulfil this fixed rate mandate and expand our relationship with Cornerstone.”
The transaction with Derwent London is the latest in a number of recent accomplishments for Cornerstone. The firm:
• had a final close of the Cornerstone Enhanced Mortgage Fund LP (CEMF) in February. The fund, with $315 million raised from domestic and international institutional investors, invests in first mortgage debt secured by real estate that has undergone an ownership change or another transition as a result of recent financial conditions;
• raised a further $400m in late 2011 from a separate account client with a similar investment strategy as CEMF; and
• held a final closing earlier this year for Cornerstone Real Estate Fund VIII with $546 million of new capital (against a $400 million target).
The deal represents Cornerstone’s first real estate lending transaction in the UK and is in line with the Company’s strategy of extending into Europe its U.S. commercial real estate debt platform, which completed $5.7 billion in real estate transactions in 2011. Cornerstone is providing Derwent London with a new fixed rate, 12-year £83 million loan. This new financing package is secured against two high quality assets in the Fitzrovia sub-market of London’s West End: a 147,900 sq ft, seven storey landmark office building at 2-8 Fitzroy Street, W1, which is fully leased to leading international engineering and design group, Arup; and a multi-tenanted block fronting Tottenham Court Road, Warren Street and Grafton Way, which incorporates the 330-room Grafton Hotel, which is let to Edwardian International Hotels Ltd, operating under its Radisson Blu brand, together with a parade of 11 ground floor retail and restaurant units, let to tenants including McDonalds, Boots, Tesco, William Hill and Ask Restaurants. The average weighted unexpired lease term is approximately 23 years. Laxfield Capital originated, helped structure, and negotiated the deal on behalf of Cornerstone, following its appointment last month to source and manage loans for Cornerstone in the UK.
The deal is typical of the type of opportunity Cornerstone is targeting in the UK, where it is seeking to provide property-secured senior loans, with a single property target lot size of between £25 million and £75 million. Cornerstone offers loan maturities ranging from seven years to as many as 20 years, which it believes are longer than those currently offered by most traditional bank lenders. The launch of the Company’s UK lending business builds on Cornerstone’s existing U.S. commercial real estate debt platform, which originated more than $4 billion in commercial mortgages during 2011, secured by circa $6.5 billion of real estate assets.
Commenting on the transaction, Charles Weeks, CEO of Cornerstone Europe, said: “The completion of our first real estate debt transaction so soon after entering the UK market and with such a high calibre partner as Derwent London is a significant achievement and clearly demonstrates our intention to put Cornerstone at the forefront of the senior lending market in Europe. This will complement the already established position in this field in the U.S., where we have a debt programme with more than $20 billion of assets under management, in multiple facets of real estate finance.”
Nick Pink, CIO of Cornerstone Europe, added: “This transaction is a perfect example of the kind of deal we are keen to undertake in the early stages of what will become, over time, a broader strategy. In this case, we were able to work with a top-tier sponsor who was willing to expand and diversify its pool of lenders, which enabled us to lend against grade A assets with very long term, high quality income streams which are able to support an extended timeframe to maturity.” Damian Wisniewski, Finance Director at Derwent London, commented: “We are delighted to welcome Cornerstone as a lender to Derwent London. This new long-term, fixed rate loan provides us with a diversified source of funding at a modest all-in interest rate, taking advantage of the recent falls in gilt rates. It also enhances our debt maturity profile and adds an important name to our established pool of lenders.“
Adam Slater of Laxfield Capital commented: “This is just the sort of launch we hoped for Cornerstone’s UK lending programme. Derwent is a first rate sponsor, and Cornerstone won their confidence that it could deliver, working smoothly to execute in the agreed timescale. We now look forward to finding more good business to fulfil this fixed rate mandate and expand our relationship with Cornerstone.”
The transaction with Derwent London is the latest in a number of recent accomplishments for Cornerstone. The firm:
• had a final close of the Cornerstone Enhanced Mortgage Fund LP (CEMF) in February. The fund, with $315 million raised from domestic and international institutional investors, invests in first mortgage debt secured by real estate that has undergone an ownership change or another transition as a result of recent financial conditions;
• raised a further $400m in late 2011 from a separate account client with a similar investment strategy as CEMF; and
• held a final closing earlier this year for Cornerstone Real Estate Fund VIII with $546 million of new capital (against a $400 million target).
