Credit Suisse to piece together £250m debt package for Hong Kong debutant

By James Buckley - Friday, August 11, 2017 9:00

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Credit Suisse has been instructed to source a £250m debt package to support low profile Hong Kong billionaire Chen Hongtian’s £410m acquisition of BP’s largest office in London, CoStar News can reveal.

Chen Hongtian, through his private real estate vehicle Cheung Kei, made his debut property purchase in the UK this summer with the acquisition of 20 Canada Square in Canary Wharf, E14, from Brookfield for a net initial yield of 5.2%.  

The Hong Kong investor has appointed Credit Suisse, the Zurich-based financial institution, to approach lenders for term sheets, seeking a 60% loan-to-value, implying total bank financing of around £246m.

The financing mandate will be welcomed by lenders in London, which have been starved of big ticket origination deals recently, mainly due to the volume of Asian investors new to the capital’s property market, buying trophy assets either on balance sheet or using relationship banks in Asia to help finance their deals.

Under the umbrella of his private Cheung Kei Group, which claims net assets of 20 billion yuan (£2.26bn), Chen has property stakes, an active trading operation in global equities and bonds out of Hong Kong.

It is understood that Hines, in a joint venture with HSBC Alternative Investments Limited (HAIL), was the underbidder on the deal, bidding around £400m; with Saudi-based investor Sidra Capital bidding around £390m. Rumours that Hong Kong investors Nan Fung and Kingboard also bid for the asset were unfounded.

The multi-let development is a prime 12-story office building principally let to two main tenants, BP and McGraw Hill International, which occupy around 243,000 sq ft each in the development.

Canadian investor Brookfield instructed JLL to prepare 20 Canada Square, E14 for sale in March and the deal will mark the largest sale on the estate for nearly three years, when the HSBC Tower at 8 Canada Square was sold to QIA for £1.18bn.

BP’s integrated supply and trading (IST) function is based at 20 Canada Square, a purpose-built trading and financial office and one of the only trading environments in the world to operate a 'thin-building' design, whereby all major technology hardware, equipment and data storage is housed offsite.

The 556,000 sq ft, Skidmore, Owings & Merrill-designed building has typical floorplates of 41,000 sq ft and was built by Canary Wharf Group in 2003. It also has around 16,697 sq ft of retail space on the ground floor.

Brookfield acquired 20 Canada Square in 2005 for £326.39m, reflecting a capital value of £619.34 per sq ft.

All parties declined to comment.

jbuckley@costar.co.uk

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