While much of the commercial real estate sector has reduced its appetite for office properties, BayernLB is one lender keeping the faith. The Munich-based bank ended 2023 with another loan secured against an office building in Europe.
In December, the German bank provided a €125 million loan to Frankfurt-based manager Commerz Real for its 2Amsterdam high-rise buildings in Amsterdam.
The buildings, which were initially constructed as twin tower office buildings in the 1990s, were redeveloped into a mixed-use asset and completed in 2021. One of the towers now contains a 300-room Meliá Hotel, the first franchised hotel for parent company Meliá Hotels International in the Netherlands. The other contains 96,875 square feet of office space.
The bank in this instance was the sole lender but just five months earlier, BayernLB was part of a consortium of banks which refinanced the Commerzbank Tower office skyscraper, owned by investment management firm Patrizia, in Frankfurt.
The loan amount for that deal was not disclosed; however, the parties did reveal the loan-to-value ratio for the transactions was 55 percent. Patrizia acquired the asset in 2016 for €800 million.
Market participants throughout 2023 told Real Estate Capital Europe investment sentiment towards offices globally has been mainly negative since covid-19, given secular trends leading to greater home-working and technology advances. This has led to lower deal volume in the asset class.
In November, consultant Savills stated European office investment was down by 61 percent year-on-year to €25 billion at the end of the third quarter last year.
However, the consultant also highlighted that Berlin, Amsterdam, Madrid and Munich now all sit within fair pricing territory and require the lowest capital value corrections in Europe.