Nordea’s DKK 1 billion (€134.3 million) debt financing of a large hotel and retail development in Copenhagen was picked by US manager Hines with an eye on developing local lending partnerships.
The deal for the Trinity Quarter, which closed in January, was announced this week. Hines did not disclose the pricing or the tenor of the loan.
This loan will be used to finance the development of the four-building, 226,000 sq ft (21,000 sq m) mixed-use asset in the heart of Copenhagen’s retail and tourist thoroughfare, close to Round Tower, one of Denmark’s most visited tourist attractions. Hines acquired the properties in 2018 on behalf of its European Value-Add Fund.
James Robson, managing director and country head for the Nordics at Hines, told Real Estate Capital: “Nordea were competitive on the commercial terms of the deal. But building that local relationship was very important to us and is hopefully something we can build on again in our next development.”
The Trinity Quarter is expected to complete in 2021 with the hotel element scheduled to open in Q1 2022. Robson said this schedule has been largely unaffected by the covid-19 pandemic, although the site’s management has had challenges.
“The contractor has worked to minimise the impact of covid-19, and while social distancing has meant fewer contractor-employees in any given site area, overall the delay has been minimal,” said Robson. “But it has provided more of a challenge around managing the site and ensuring the safety of the site.”
Robson declined to disclose the tenor or pricing of the loan but said the financing will “have enough tenor to complete the redevelopment and subsequently hold the asset”.
He added pricing terms were agreed at the start of the year, before most European lenders had hiked up margins in response to covid-19 uncertainties. Robson said that price hikes are still not currently being seen in Danish transactions.
“So far, we have not seen higher financing costs in Denmark due to covid-19,” said Robson. “A strong sponsor, who is able to offer guarantees satisfactory to banks, is still able to find development and standing asset financing, as long as the quality of the real estate is of sufficient quality.
“Banks, like equity investors, are scrutinising each deal and will only lend on the best product.”
Robson said a consensus around the quality of the development led to lender interest. “Although there are concerns about retail globally, we believe that the best locations will remain resilient in the longer term.”