Axa IM Alts has confirmed it has secured £480m of financing for its 50 Fenchurch Street office development.

(Article written by May Agaran and James Buckley for React News).

React News revealed in November that the fund manager was close to striking a loan agreement with Cale Street Partners for the £1bn redevelopment of the City of London asset. Investor Cale Street is backed by Kuwait’s sovereign wealth fund, and was reported to be providing the financing at around 60% loan-to-cost.

The transaction marks one of the largest development loans agreed ahead of any prelet in the UK at the start of 2023.

The debt facility, which has a six-year term, will fund the delivering of the 36-storey net zero building, which will offer around 650,000 sq ft of workspace. Demolition and enabling works have already begun on site, with construction expected to start this year following the appointment of a main contractor. Axa IM Alts has appointed YardNine as delivery partner for the project.

The design for the scheme will incorporate vertical urban greening, with the entire structure to be powered entirely by electricity. It will aim for BREEAM Outstanding certification and to be net zero in operation.

The project will also retain and relocate two historic buildings, the Tower of All Hallows Staining and Lambe’s Chapel Crypt, as part of an extensive public realm, with more than 1.5 acres allocated for outdoor space and terraces.

Rob Samuel, UK head of development at AXA IM Alts, said: “The divergence in the London office market between prime well connected, sustainable, amenity rich spaces and poorer quality buildings continues apace, with a supply-demand imbalance in favour of the former.

“Cale Street’s support for this BREEAM Outstanding development is a strong endorsement of our approach at 50 Fenchurch Street, where we will deliver a landmark, next-generation office into the heavily supply constrained City of London market.”

Axa acquired the leasehold interest of 50 Fenchurch Street in a joint venture with YardNine in the summer of 2023. It plans to relocate the existing Clothworkers’ Hall on Mincing Lane as part of the development.

Prior to its acquisition, the investment manager had nearly missed out on a deal to buy the property in October 2020, as it was bidding against a joint venture between Cadillac Fairview and Stanhope, revealed by React News.

Later on, M&G Real Estate was reported to be the favourite to secure the deal before it  abruptly ended talks on the sale, going as far as exchanging contracts before withdrawing its interest, subsequently giving Axa and YardNine an opportunity.

The Clothworkers’ Company first instructed Capital Real Estate Partners in 2020 to sell the leasehold interest in the scheme.

The Clothworkers’ Company has been on its current site since its founding in 1528 but the existing hall, built in 1958, is the sixth on the historic site. The third hall was destroyed by the Great Fire of London of 1666, and the fifth hall damaged by the Blitz in 1941.