OakNorth completes £16m loan for development of 200-bedroom aparthotel in Liverpool

By Bridging Loan Directory 16th January 2017

· OakNorth, has completed a £16m loan to the Mason family – experienced real estate investors and developers with a portfolio of c.£100m;

· The loan will be used to convert several floors of the Corn Exchange Building into a 202-bedroom aparthotel;

· The development has already been pre-let to Staycity, the growing aparthotel operator with over 1,400 units across eight European cities.

OakNorth – the bank for entrepreneurs, by entrepreneurs – has completed a debt finance deal worth £16m to the Mason Family, well-known real estate investors, developers and advisers in Liverpool and the North West.

The loan will be used to convert seven of the 11 floors in the Corn Exchange Building into a 202-bedroom aparthotel. The building has been owned by the Mason Family for the past 17 years and is where Mason Partners LLP is currently headquartered. The property is based in the centre of Liverpool’s commercial region close to James Street Station (2-min walk), Liverpool One (5-min walk), Albert Dock, and the new BT Convention centre.

The development has already been pre-let on a 35-year lease to Staycity, the ambitious aparthotel operator which currently owns 1,400 units but hopes to increase this figure to 10,000 by 2021. The group was founded in 2004 and now operates across several key UK & European cities including: London, Manchester, Paris, Birmingham, Dublin, Edinburgh, Liverpool, and York, with additional premises due to open next year in Marseille and Lyon. In addition to the standard Staycity facilities – 24-hour reception, fully-equipped kitchen, bathroom, complimentary Wi-Fi access, flat screen TV with Freeview, DVD player, and weekly housekeeping – the Corn Exchange will also have a guest laundry, fitness room, car parking, luggage lockers, and an open-plan seating area where guests can work or eat.

The success of Airbnb, coupled with changing attitudes towards business travel, particularly amongst millennial travellers, has played a key role in the growth of the aparthotels and extended stay sector. With millennials forecast to account for 50 per cent of business travellers by 2020, and a number of global hotel operators such as Marriott and InterContinental entering the space, this trend looks set to become even more pronounced over the next five years.

Commenting on the deal, Andrew Mason, Director at Mason Partners LLP, said:

“We’re delighted to have pre-let the property to Staycity – once completed, this will be the largest aparthotel development in Liverpool. Last year, the sector experienced a new average high in the city with occupancy levels averaging 78 per cent over the course of the year, reaching a peak of 90 per cent in Q3.

“The team at OakNorth worked tirelessly to complete the deal in just a few weeks, and the speed at which they responded to questions and queries was pretty remarkable. They have a great understanding of the sector and in the 14 months since they launched, have done a number of high-profile property deals across the UK.”

Rishi Khosla, co-founder and chief executive of OakNorth Bank, commented:

“Since launching in September 2015, OakNorth has lent to a number of developers for projects ranging from hotel acquisitions and co-living developments, to strategic acquisitions of Prime Central London properties, and serviced apartments or aparthotels.

“With over 40 years’ experience of investing in and developing real estate in and around Liverpool, the Mason family has a firm grasp of how the city is set to evolve over the next few years, so it’s no surprise that they’ve been able to pre-let the property before development’s even gotten underway. With a portfolio of c.£100m and ambitious plans to continue growing, we look forward to working with this established family business in the future.”