Delancey Real Estate Closes 105 Jermyn Street Deal for £19.5 Million
Delancey Real Estate is leading real estate asset management and advisory company based in the UK. This article will look at a transaction Delancey Real Estate closed on 10th January 2024, securing a three-year, fixed rate facility to assist Zero Carbon Space Ltd in a deal worth a reported £19.5 million.
Zero Carbon Space Ltd is a development platform created through a collaboration between LandCap and NorthStar Capital. The organisation was created with the mission of delivering best-in-class sustainable office spaces. Thanks to the support of Delancey Real Estate, Zero Carbon Space Ltd recently acquired 105 Jermyn Street, a property located in London’s St James district, at the heart of the West End.
105 Jermyn Street is a prime, 16,000-square-foot mixed-use asset. Once planning permission has been obtained, Zero Carbon Space Ltd intends to undertake a comprehensive refurbishment of the property. The acquisition financing offered a rare opportunity for exposure to a freehold asset in the area’s sub-market, with the debt package representing a loan-to-value ratio of circa 70% and offering the ability for Zero Carbon Space Ltd to request capital for the refurbishment.
Martin Farinola, Delancey Real Estate’s head of debt strategies, confirmed that company was extremely pleased to help Zero Carbon Space Ltd with its acquisition of the building on Jermyn Street. Once Zero Carbon Space Ltd’s plans come to fruition, the building will be transformed into an attractive and sustainable landmark in a prime London location.
Farid Alizadeh of Zero Carbon Space Ltd expressed his excitement at working with Delancey Real Estate to deliver his organisation’s mission of enhancing the workplace by delivering best-in-class sustainable offices in central London. Mr Alizadeh indicated that this was just the first in a pipeline of projects planned by Zero Carbon Space Ltd, explaining that Delancey Real Estate had been ‘professional, commercial, quick and honourable’ throughout the transaction.
Philip Kay, who represents Arc & Co, the company that advised the sponsor on the transaction, said he was delighted to work with two excellent counterparties. Mr Kay said that, on the sponsor side, the Zero Carbon Space Ltd thesis was robust, with investment targeted in strong London locations. Against the backdrop of a difficult environment in 2023, Mr Kay said that Arc & Co was pleased to work with Delancey Real Estate as a competitive and flexible capital provider with a strong appetite for the asset class and business plan.
Given the current withdrawal of traditional financing sources and resulting increase in need for flexible alternative lenders, 2024 appears poised to be a year of opportunity for Delancey Real Estate’s lending business. Commenting on the market, Martin Farinola suggested that 2023 had been a volatile time in the market, with the majority of the deal flow centring around refinancing deals rather than acquisitions. Nevertheless, the last few months of 2023 saw an uptick in acquisitions and attractive deals, according to Mr Farinola, signifying a positive market trajectory, with sponsors seeking clever and reliable financing solutions.
With remaining capital to deploy, Delancey Real Estate’s lending platform is looking to support quality borrowers and properties. December 2023 was an extremely busy time for the company, which funded two loans and agreed terms on somewhere in the region of £75 million in loans. Moving through 2024, Delancey Real Estate’s pipeline appears strong. Besides new enquiries, there are also several transactions that were paused at the end of 2023 that appear likely to start moving again in 2024.
Boasting an unsurpassed track record in UK specialist property investment, development and advisory services that spans more than a quarter of century, Delancey Real Estate partners with high-quality sponsors via its lending platform, providing flexible capital that enables borrowers to deliver their business plans. Delancey Real Estate’s established specialist debt team provide mezzanine, senior, whole loan and preferred equity capital across all property types and sectors in the UK, with a primary focus on the £10 million to £100 million value range.
Around the world today, buildings account for around 40% of total carbon emissions, according to research by the WorldGBC. Based on audits across 32 cities, the contribution of buildings to citywide carbon emissions is around 60%, on average, placing the onus on developers to make buildings greener and more environmentally friendly.
Worryingly, experts estimate that just 10% of the 50,000 office buildings across London are compliant with the minimum EPC rating of B. With many obsolete office buildings unable to be legally relet until they are retrofitted, Zero Carbon Space Ltd has recognised a new market opportunity, providing green buildings capable of achieving maximum pricing, rents and tenant interest.
Through its partnership with Zero Carbon Space Ltd, Delancey Real Estate intends to complete a full refurbishment of the landmark 105 Jermyn Street property. Through the partnership, Delancey Real Estate will help to advance Zero Carbon Space Ltd’s mission of countering the cyclical approach to development, facilitating the acquisition of office assets across Central London and retrofitting and repositioning assets to deliver best-in-class green buildings.