ASK and OakNorth Bank co-lend £56.2m to RE Capital to fund development of 74,000 sq ft hotel-led scheme in Clerkenwell

RE Capital will use the loan to fund the construction of a mixed-use hotel-led scheme in Clerkenwell, central London, on the site of a former Victorian school building and car park.

The scheme will comprise a new build 153-bed hotel, plus an extension and remodelling of the existing Victorian schoolhouse to include 18,700sqft of Grade A office space and nine new-build affordable residential units. The total development will be 74,000 sq ft.

Planning consent was granted in January 2020 for a 153-bed ‘affordable luxury’ scheme and a pre-let agreement is already in place between RE Capital and German hotel group, Ruby GmbH, for a 30-year term.

The site is in close proximity to other high specification offices occupied by well-known tech firms, including the former Guardian building where LinkedIn recently took a 83,000 sq ft pre-let. The office development will see a two-storey extension and private terraces added to the existing school building. It will benefit from an excellent central London location, with Crossrail within five minutes and other transport links only half a mile away at Farringdon and Chancery Lane.

Construction has commenced, with HG Construction appointed as contractor. The offices are due to be completed in February 2023, and the hotel and residential will follow in July.

Simon Banks, Head of UK at RE Capital commented: “We are excited to be launching the construction phase of this mixed-use scheme, which will bring significant regeneration to the local area. The development will be finished to exceptionally high sustainability, wellness and connectivity standards, focusing on cutting-edge interior design for the newly evolving workplace, alongside the quality that Ruby Hotels will deliver as a highly reputable brand. We are delighted to have ASK and OakNorth Bank as our valued funding partners on this project.”

Daniel Austin, Co-founder and CEO of ASK said,

“This is a fantastic scheme that we were delighted to fund. Having funded a number of hotel and office schemes this year, we are fully confident in the recovery of both these markets post-Covid, as the current take up of office space and steady rise in hotel occupancy proves. Having provided a £12.5m bridge loan against this site in April 2020, we were pleased to continue our involvement in this excellent scheme by funding the development phase. I look forward to seeing the plans come to fruition.”

Hemesh Patel, Director of Property Finance at OakNorth Bank, said,

“Under Simon Bank’s leadership in the UK, RE Capital has built an exceptionally strong reputation within the real estate investment market and we’re delighted to once again co-lend with ASK to support the development of this well-designed scheme. Given its central location close to a number of top tourist attractions, wide range of amenities and office buildings, we expect the new hotel to see strong demand from both corporates and tourists. Furthermore, the office space has the potential to become one of the most renowned sites in the ‘City Fringe’ area and will certainly be highly desirable in the new post-Covid flight-to-quality marketplace.”

RE Capital was advised by Katten Muchin Rosenman and JLL. ASK and OakNorth were advised by Mischon de Reya.