London Apartment Skyscraper Builders Seek to Borrow $300 Million
The builders of a London apartment tower almost as tall as the Gherkin skyscraper plan to borrow as much as £200 million pounds ($300 million) to fund construction.

Brookfield Property Partners LP, Concord Pacific and W1 Developments have committed to about 35 percent of Principal Tower's 245 million-pound cost, Christopher Murray, managing director at W1, said in an interview in Dubai. The project in Shoreditch, directly north of the City of London financial district, includes the office building that Amazon Inc. agreed to lease as its new UK headquarters.

"It will be probably a club deal of around four banks and obviously we'll borrow the maximum we can," Murray said on Monday. Arranging the funding won't be difficult "given our sales rate and the price point achieved," he said.

More than 2,000 apartments near the Old Street roundabout north of the City are planned or under construction as executives, bankers and traders priced out of London’s most prestigious areas search for alternatives. More than 800 units are being built inside the financial district.

Developers of the 50-story Principal Tower are in Dubai to market the upper floors to Persian Gulf investors. Since going on sale in September, 130 of the planned 273 apartments have been sold, Grant Murray, vice president of sales at Canada’s Concord Pacific, said in the same interview.

While the lower levels are selling for about 1,520 pounds a square foot. The owners expect to get as much as 2,000 pounds a foot for apartments from the 40th floor.

“We see a lot of demand regionally for London,” according to Will McKintosh, joint head of residential property for Middle East & North Africa at Jones Lang LaSalle Inc. He sees values rising by 1.5 percent to 2 percent this year, which is below the average gains of 7 percent over the past few years.

Construction of the tower has already started and the developers estimate a rental yield for buyers of about 4 percent “which could hit 6 percent” when construction is completed, W1’s Murray said.

“Typically buyers in the region are postcode specific, not wanting to go outside the so called Golden post codes,” McKintosh said. “But in the past 18 months to two years, they have been looking at new investment areas.”

The project will include a gym, spa, swimming pool and other amenities. A piazza, shops, cafes and restaurants will be built around the tower.