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Allianz puts faith in high street retail with €300m Paris loan

The facility, provided to German pension fund BVK, finances what will be Apple’s flagship European store on the Champs-Elysées.

Allianz Real Estate has written a loan of circa €300 million to support the acquisition of the building that will house Apple’s flagship store on Paris’s Champs-Elysées.

The 15-year loan, with a 50 percent loan-to-value ratio, has been provided to German pension fund Bayerische Versorgungskammer (BVK), to back the acquisition of the building from EPI, a French independent investment group, for €600 million. Crédit Agricole Corporate and Investment Bank acted as facility agent in the debt deal.

The 5,800-square-metre Haussmannian building, located on 114 Avenue des Champs-Elysées, was formerly occupied by a luxury shoe brand and will become Apple’s European flagship store in Continental Europe after a restructuring programme. The store is forecast to open before the end of 2018.

The loan for the Apple store building comes at a time when the retail sector is under scrutiny, given the rapid raise of e-commerce. Lenders, however, are not reticent to finance “super-prime” retail assets on locations of “undisputable perpetual quality” such as the Avenue des Champs Elysees, which attracts 100 million visitors annually, Roland Fuchs, head of European debt at Allianz, told Real Estate Capital.

“Oversized and aged shopping centres in B-locations might be a different play, but not this type of asset,” Fuchs noted.

A “top-notch” sponsor such as BVK, with a long-term investment view, has also been a key motivation for Allianz to back this asset with a long-dated loan, Fuchs added.

Debt is a fast-growing business line for Allianz Real Estate. In 2017, its European debt portfolio increased by €1.9 billion to €6.3 billion, on the back of significant deals, such as the €312 million financing for the ‘Atrium’ office building in Amsterdam and the €300 million for ‘Window” in Paris. The German insurer also expanded into the UK, including the refinancing of 55 Baker Street, a mixed-use building in London’s West End.

“We expect European debt to play a continued central role in our asset growth in 2018 and beyond, both in core markets such as France and Germany but also in new territories,” Fuchs said.