German fund to back Allied London’s new Spinningfields block
ALLIED London is close to obtaining £165m of funding for a 350,000 sq ft office block at Spinningfields in Manchester, in what would be a stunning speculative deal for the North West, according PropertyWeek.com.
Frankfurt-based fund manager Union Investment Group is in advanced talks to forward-purchase Allied London’s development at 1 Hardman Square for around £165m before a pre-let has been agreed.
It would be the first speculative office development deal in the North West since before the downturn, and a sign that overseas investors have faith in the long-term growth prospects of the UK’s regions despite a lack of demand.
Under the terms of the deal, Union would provide development finance for the Foster & Partners-designed block, and in return would receive a discount on its end value, which market sources suggested could be £180m if fully let.
The purchase would put Union among the vanguard of institutions starting to fill the speculative funding vacuum left by the banks since the downturn. Lenders now require sizable pre-lets before borrowers have any hope of obtaining a loan.
Allied London, which is run by chief executive Mike Ingall, has historically kickstarted its Spinningfields properties with bank finance and no pre-lets, but its buildings have tended to be at least 60% let on completion.
Spinningfields is home to many major professional service firms including business advisers Deloitte, Grant Thornton, BDO and PKF, law firms DWF and Pinsent Masons, Royal Bank of Scotland, Barclays Corporate and HSBC.
