Pru Lends $73M for Hines’ Purchase of London Office

Prudential Mortgage Capital Co. has provided $73 million in financing for Hines Global REIT’s recent purchase of One Westferry Circus, an office building in London’s Canary Wharf district.

Prudential Mortgage Capital Co., the commercial mortgage lending business of Prudential Financial Inc., has provided $73 million in financing for Hines Global REIT’s recent purchase of One Westferry Circus, an office building in London’s Canary Wharf district, Pru announced Wednesday.

One Westferry Circus is an eight-story, 219,800-square-foot office building built in 1992 by Olympia & York, the company that originally started the boom in the Canary Wharf/Docklands area in east central London. The building is 96 percent leased to Valero Energy Ltd., De Vere Venues Ltd. and Littlejohn LLP.

Commercial Property Executive reported on the sale itself on March 7. Hines paid $124 million for the property, acquiring it from an affiliate of TIAA-CREF.

The Prudential loan, apparently, takes out the bridge financing portion of the funding described in the initial news story: a combination of proceeds from a Hines IPO and a revolving line of credit with JPMorgan Chase.

“Prudential has tailored this seven-year loan to meet our needs,” Ian Brown of Hines UK said in a release. “It extends beyond several lease events and allows us to focus on our property strategy without the complication of maturing debt.”

“Increasingly, we are seeing companies from a diverse range of industries exploring Canary Wharf as a viable location due to its low occupancy cost compared to other established office markets and the area’s improving infrastructure and access,” Drew Abernethy, head of European originations for Prudential Mortgage Capital, said in the same release.

 

The Docklands market has experienced “muted” absorption recently, according to London-based GVA, the UK’s largest independent commercial property consultant, though a significant increase in demand is expected to start playing a role later this year.

The overall vacancy rate for Docklands office space was stable at 8.1 percent at the end of the first quarter, according to a GVA report, representing 1.6 million square feet of available space.

Only one office property is currently under construction in the Docklands, the partially preleased 542,000-square-foot building at 25 Churchill Place, which is scheduled for completion next year.