German banks are increasingly targeting real estate debt in Spain as that country’s economy recovers.
In the latest deal, Aareal Bank has provided a €120m facility to Torre Rioja Madrid for a portfolio of three office buildings in central Madrid.
Torre Rioja Madrid owns and manages 15 office, residential, parking and hotel buildings in the capital.
In a separate deal, pbb Deutsche Pfandbriefbank provided a €23m long-term facility to Spanish REIT Merlin Properties. The loan would be used to finance the development of building number 6 in WTC Almeda Park, Barcelona. pbb is the sole lender.
The bank said it had been selective in Spain but now planned to intensify its lending in the country.
“Since 2013 we have observed investors returning to the Spanish property market in ever increasing numbers and 2014 has recorded the highest investment volume since 2007,” said Norbert Müller, head of Real Estate Finance Continental Europe West at pbb Deutsche Pfandbriefbank.
“This transaction with Merlin Properties shows our commitment to back professional sponsors and asset managers in Spain,” said Müller.
Margins in Spain have almost halved since late 2013 and are now running between 200-275 with LTVs rising to 65%.