ICG-Longbow backs London resi tower with £135m loan

The real estate debt fund has provided the funds for the development of apartments in Canary Wharf by LBS Properties.

ICG-Longbow has closed its first financing of a London residential project for its UK development lending mandate, with a £135 million loan for an apartment tower in Canary Wharf, PDI sister title Real Estate Capital has reported.

The construction facility has been provided to London-based developer LBS Properties through the ICG-Longbow Development Fund – the segregated mandate through which it raised £427 million last year, understood to be from the Abu Dhabi Investment Authority.

The facility finances a £300 million scheme designed by Make Architects known as The Madison; a 53-storey development which will contain 423 studio, one, two and three-bed flats, plus 104 units classed as affordable.

The project, which is on-site now, is expected to complete in 2020, although the loan is understood to finance the scheme until 2021.

ICG-Longbow completed a £427 million fund-raise from a single party for its UK residential development strategy last March. It has declined to confirm that ADIA is the single investor in the fund. The mandate is to provide loans backing schemes targeted at the private sales market, although developments would also ideally be suitable for the private-rented sector.

Prior to the Madison deal, lending activity for the mandate had been concentrated on the UK regions. The Madison loan is the first major construction loan provided in London. The deal has been closed despite a backdrop of slower sales of high-end apartments in London.

Adam Hayner, managing director of the ICG-Longbow Development Fund, told Real Estate Capital that the firm has been cautious in London: “We saw here an opportunity to provide a loan of scale in a part of the market with less capital available, allowing us to be a single source of capital in the deal.”

“We are still approaching the London market cautiously, although we do see some downward pressure on land values so there is an opportunity for us to support developers,” he added.

The Madison is 35 percent pre-sold, Hayner added, reducing the lending risk. Hayner also pointed out that units are priced around the £1,000 per square foot mark, rather than at the ‘super prime’ end of the London housing market, which has seen a particular slowdown in sales. Units are being predominantly sold from the on-sight sales office rather than being marketed abroad, he continued.

The Madison’s amenities will include a residents’ lounge, gym, swimming pool and 24-hour concierge, putting it at the higher-end of the capital’s housing.

“Signing the development loan with ICG-Longbow marks a significant milestone for The Madison. In the last 12 months we have secured a strong forward sales position on both the market and affordable housing, appointed a main contractor and undertaken substantial early stage construction works,” said Nick Crawford, director at LBS Properties.