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DekaBank finances TH Real Estate in Birmingham – Exclusive

The German bank has provided a £48m loan backed by the 55 Colmore Row office building.

TH Real Estate has sourced £48 million (€55 million) of finance for its recently acquired 55 Colmore Row office building in Birmingham, through a loan with DekaBank.

The seven-year facility, which reflects a 55 percent loan-to-value ratio, is the first provided by the German lender to TH Real Estate in the UK market. TH Real Estate said there was significant interest from several lenders to provide finance to the regional UK asset “at terms better than pre-Brexit”.

“The loan is well structured at attractive pricing, and Deka showed a great sense of commerciality in the negotiation process,” said Farrah Brown, head of treasury at TH Real Estate. Further details of the loan pricing were not disclosed.

The investment manager paid around £98 million in January to buy the 158,000-square-foot building for its European Cities Fund. The building, one of Birmingham’s most prominent office blocks which also includes ground-floor leisure space, was sold by Midlands-based property company IM Properties.

The European Cities Fund invests in prime assets in cities set to benefit from long-term, structural trends including demographic change, urbanisation and technology. The open-ended fund was launched in March 2017 with the aim of raising at least €5 billion, Real Estate Capital’s sister title, PERE, reported last November. By that point, TH Real Estate had raised around €1 billion. The fund targets a 5 percent net return.

The Birmingham building sits within the fund alongside assets including Helskinki’s Kamppi mall, Madrid’s Xanadu shopping centre and The Cube office building in Berlin.

At the time of the acquisition of 55 Colmore Row, Andrew Rich, fund manager of the European Cities Fund, commented: “Birmingham has benefitted from substantial regeneration and inward investment of roughly £1 billion in recent years, raising the city’s business profile and attracting global companies. Given the attractiveness of the building, the low vacancy rates for Grade-A office stock and limited supply within the city, we believe this asset should deliver excellent returns for the Fund.”

IM Sold 55 Colmore Row following a full refurbishment of the building, which completed in 2017. The asset is let to tenants including Pinsent Masons, Savills and RICS, with a Gaucho restaurant on the ground floor.

James White, senior director at DekaBank’s London branch, said the building provides “some of the best office accommodation currently available in Birmingham”, adding the bank would work with TH Real Estate to maximise the building’s “considerable potential”.