OakNorth lends on Hampstead resi scheme

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OakNorth bank has provided a £22m loan to Godfrey London and Cogress for their prime residential scheme in north London.

The 14-home Netherhall Gardens luxury development in Hampstead was completed earlier this year and launched eight weeks ago.

OakNorth has provided a new senior loan to buy out the existing senior lender, Bank Leumi, on an 18-month term.

The agreement will allow Godfrey London to pay off its mezzanine debt first, reducing costs. £11.4m was provided in mezzanine debt by a joint venture between Urban Exposure and  US private equity firm EJF Capital in late 2015.

Ben Barbanel, head of debt finance at OakNorth, said: “Clearly in this market we would not do everything we see at this end of the market, but this one ticks all the boxes for us.

“One of the things that OakNorth focuses on is flexible debt solutions and this was another example, allowing a facility to be granted to the borrower, effectively refinancing his existing senior debt and enabling the developer to repay the more expensive mezzanine finance on the site in advance of us as senior lender.”

Since its launch, six flats at the scheme have been placed under offer or exchanged.

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Paul Godrey, director of Godfrey London, said the flats were not launched until practical completion to allow people to see the finished product.

“On a scheme like this, which is a very specialised development and producing the highest quality you could possibly do, you lose the ability to wow people if you pre-sell it,” he said.

“A, you won’t get the best prices, and B, with the amount of hard work and dedication everyone has provided on this project… We were not under a particular time threshold to sell it quickly… Our view was that to maximise value and the ability to sell, everything needed to be finished.”

Godfrey London bought the site with equity partner Cogress in 2014. Cogress arranges equity through a network of qualified private investors who each put a smaller amount into various projects, allowing them to build their own property development portfolios.

Tal Orly, chief executive of Cogress, said: “Despite being a large deal in terms of ticket size, most traditional banks would have been reluctant to support this project due to the complexity of the funding structure, or would have taken far too long to get the funding off the ground.

“OakNorth is willing to be flexible and work with us to get the deal done. This is essential in enabling us to offer robust and intelligent investment opportunities to our network of qualified investors, and financial speed and flexibility to our developer partners.”

Cogress has provided a further £3.4m of equity towards the project, on which prices range from £1,550 per sq ft to £1,700, with finished apartment prices starting at £2.4m. The scheme has a GDV of £48m.

The property has an important history.  In the 1920s it was bought by British banker and philanthropist Otto Schiff. When the Nazis came to power in 1933, Schiff worked to establish the Jewish Refugees Committee  within it, organising the rescue and sheltering of 12,000 German and Austrian Jews.

When he died in 1952, Schiff left a bequest establishing the building as a trust and care home for victims of Nazi persecution. The building was operated independently until 2010 before being incorporated into Jewish Care and relocated to a facility in Golders Green.

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