TEF Telford Homes Plc

By Art Patnaude 

LaSalle Investment Management said Tuesday it will lend GBP110 million ($144.5 million) for a residential development in north London, one of the largest property-financing deals in the U.K. since the country voted to leave the European Union.

A joint venture between U.K. home builder Telford Homes PLC and the regeneration firm Business Design Centre Group will use the loan to build 355 condominiums alongside commercial space. The project in Finsbury Park, about five miles from Big Ben, is due to finish in 2020.

"It's a big loan post Brexit," said Amy Anzar, head of debt and special situations at LaSalle.

London's real-estate markets are expected to come under pressure following the June 23 referendum. After years of booming demand, commercial property values are expected to fall and house prices could also cool, especially in London.

Concerns that property values could fall have made lenders more cautious.

In the last few weeks, the terms of loans to this sector have been "a bit more conservative to reflect the increased risk," said David Lebus, director of debt advisory at property broker JLL.

Ms. Anzar declined to say the exact terms of the new loan, but said LaSalle typically lends up to 60% of the gross development value for senior loans.

"We're obviously putting in a healthy degree of caution in terms of the outlook on the U.K. market," she said. "Having said that, we're actively lending."

Lending to U.K. property companies had only just recovered from the 2008 financial crisis. In 2015, the total amount of outstanding debt on U.K. commercial property rose for the first time since 2008, according to a De Montfort University study.

Soured real-estate loans, from mortgages to lending to developers, were at the root of that crisis.

Chicago-based LaSalle, which manages assets valued at around $59 billion, in the past 18 months has invested GBP750 million in 17 property loans.

Certain parts of the U.K. property debt market are more at risk of falling values than others, Ms. Anzar said. Homes in the new development, called City North, will sell for less than GBP1,000 a square foot, a "price point that is affordable for domestic purchasers," Ms. Anzar said.

"A higher-end price point we'd be much more cautious on at the moment," she said.

Write to Art Patnaude at art.patnaude@wsj.com

(END) Dow Jones Newswires

July 26, 2016 03:14 ET (07:14 GMT)

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