PGIM finances Fox Court buy

PGIM Real Estate Finance has provided a £50.1m loan to the private Middle Eastern investor which acquired Fox Court, a 103,555 sq ft office property in Central London’s Midtown.

The loan reflects a 49.38% LTV on the £101.45m purchase price, which reflected a capital value of £979.67 per sq ft.

PGIM Real Estate Finance, among the largest commercial mortgage lenders in the United States, is a business of PGIM, the $1 trillion global investment management business of U.S.-based Prudential Financial, Inc.

The 15-year loan helped to finance the acquisition of the building that counts WeWork as its main tenant. Built in 1976, the building has seen two major refurbishments since its opening, most recently in 2015 when WeWork took occupation. WeWork is a market-leading provider of shared workspace and services for more than 90,000 members around the world.

“The growing demand for flexible space provides an interesting opportunity to finance a non-traditional office sector, particularly as PGIM continues to expand its debt offering,” said Aaron Knight, a director with PGIM’s London office who led the debt transaction. “Given the improvements in the variety and quality of office space available, we expect Midtown to withstand any potential Brexit impact because of its diverse tenant mix, which also has strong ties to the resilient legal profession.”

The Midtown area has historically been a hub for law firms and the legal profession. However, a recent shift in occupier trends has brought technology and financial firms to the area and led to a more diverse range of office tenants. Fox Court is also set to benefit from nearby infrastructure projects, such as the development of London’s Crossrail, which should improve connectivity to the area as phased operations begin from late 2017.

“Our decision to proceed with PGIM for this financing was justified by the smooth and efficient process from start to finish that enabled our client to complete within the targeted timeframe and on very competitive terms,” said Adam Buchler, a principal with Buchler Barnett Spencer who advised the sponsor on the transaction.

“This transaction is an example of increasing demand in the market for core plus and value add properties,” said Bryan McDonnell, a principal with PGIM’s London office. “Borrowers who are faced with high single tenant concentrations and near term lease roll, or those seeking higher whole loan leverage, are looking beyond the typical core lending market.”

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