Consortium agree club lending deal for St David’s retail scheme in Cardiff

A consortium of four German banks is to refinance Land Securities’ and Capital Shopping Centres’ (CSC) St David’s Shopping Centre in Cardiff, Wales.

Eurohypo, Deutsche Postbank, Immo Bank and Deka Bank have teamed up to provide a debt facility thought to be around £300m for the entire development, including the St David’s 2 extension, which opens this autumn.

The news of a club lending deal will be a lift for the UK commercial property market, which has been almost crippled by the lack of bank lending in this recession.

St David’s is the principal covered shopping centre in central Cardiff and is anchored by a 260,000 sq ft Debenhams. After the extension – which comprises around 125 shops and restaurants – opens, the overall size of the scheme will increase to 1.4m sq ft, creating one of the UK’s largest city centre retail schemes.

There is also office space, leisure facilities and some homes within the scheme.

The St David’s scheme is CSC’s largest development project in its portfolio and it is also significant retail property holding for LandSecs.

CSC’s parent, Liberty International, said in its results last month that 51% of the extension area and 40% of the anticipated rental income was ‘currently either exchanged or in solicitors’ hands’. It said a further 10% is in contractual negotiation or at the heads of terms stage.

It also said the latest market valuation of CSC’s 50% stake in St David’s 1 was £71m and the development value of St David’s 2 was £90m.

The exact details of the loan have not been revealed but it is thought it has been secured for a medium-term period and no equity has been taken out by LandSecs or CSC.

If the refinancing deal completes, it will be a strong vote of confidence in the UK retail sector at a time when it is reeling from a wave of retailers hitting the buffers, which has impacted landlords.

It could also be a promising sign that some German banks may be reconsidering lending on appropriate commercial deals, particularly after the reopening of Germany’s ‘pfandbrief’ or triple-A bond market last month, when Deutsche Postbank sold a €1bn pfandbrief.

All parties declined to comment.