ING provides €47m to TH Real Estate for Italian retail park

ING Real Estate Finance has provided a €46.7 million loan to TH Real Estate to refinance a recently-purchased retail park in the Italian city of Bologna.

TH Real Estate bought the Meraville Retail Park in May from Orion European Real Estate Fund IV for a price in the region of €100 million, a net initial yield of around 6 percent. ING’s facility therefore reflects a relatively conservative loan-to-value ratio of below 50 percent.

The loan refinances an existing facility which ING provided to Orion in 2013. Orion was reported to have bought the retail park from Pradera for around €80 million in December 2013.

Real Estate Capital understands that the new seven-year loan is the same size as the original, which was due to mature in 2019. The new loan has been priced at the same margin as the original loan for the first three years of the term, reflecting the maturity of the original facility. The margin therefore does not reflect current Italian market pricing for the first three years, which are protected by prepayment penalties. For the remainder of the term, the margin is understood to drop to less than 200 basis points.

The Meraville retail park contains 35,975 square metres of space and is occupied by tenants including COOP, Mediaworld and Leroy Merlin.

The acquisition of the property was TH Real Estate’s first investment through its European Cities Fund, an open-ended real estate fund which was launched in March 2016. The fund was launched with €200 million of equity and has target total investment in the range of €3-5 billion in the next five years.

At the time of the purchase last month, Liz Sworn, TH Real Estate’s European fund manager, said: “Measured against other European cities, Bologna continues to outperform in areas such as employment, growth and GDP per capita. In addition, retail sales growth in the city is predicted to average 1.4 percent per annum in the next five years, outperforming the Italian average. We strongly believe in the investment fundamentals of Bologna and feel that Meraville Retail Park will prove to be a strong asset for the fund.”