French real estate company and developer Apsys has secured €347 million to finance an urban development project in the Gare Saint-Jean district of Bordeaux, one of the largest green financing deals of 2024.
The total development, called Canopia, consists of 9.9 acres within the UNESCO world heritage site of the fine wine region, adjacent to the river Garonne.
The loan, which has a term of five years, was provided by French investment bank Natixis CIB alongside an unnamed lender, which provided the majority of the debt.
Canopia is a long-term multi-purpose urban development, which obtained its first financing at the end of 2017, when Apsys negotiated with the local authorities to acquire the land and obtain building permits.
The project, which is expected to be finished in 2027, includes the creation of shopping centres, hotels, restaurants, leisure facilities, offices and housing.
Jean-Philippe Carrascosa, chief financial officer at Apsys, said: “In the current uncertain climate, our lenders saw the Canopia project as both financially balanced and pioneering from an urban and environmental perspective.”
French law firm De Pardieu Brocas Maffei advised Apsys on the deal, while legal practice Allen & Overy Shearman advised the lenders.
A tough crowd
In an increasingly selective lending market, borrowers must work hard to demonstrate the value of their projects to convince ever-cautious finance partners that the deal is worthwhile, said Carrascosa.
Speaking to Real Estate Capital Europe about the financing, he said: “For a large-scale urban project like this, we needed to present a very attractive opportunity to convince potential lenders”.
Carrascosa believes a development must demonstrate high environmental standards to be attractive to lenders. He added: “It’s not only about securing financing, but you can’t ignore that investing in transitional projects brings more opportunities for the value of the project to increase once it has been upgraded to a higher level in compliance with increasingly relevant ESG demands.”
Aware of the tough lending environment, Apsys began reaching out to potential lenders in 2023 with a strategy “to present the Bordeaux project as exciting, relevant and lucrative, with a sustainable edge”.
The shortlisting process involved consultations with six potential financiers, with four lenders issuing term sheets.
“We decided to collaborate with Natixis and the other lender because of the strong existing relationship we have cultivated from previous projects,” explained Carrascosa. “We were convinced the duo believed in the mixed-purpose use case of the project and that they were satisfied with the quality of the planned outcome.”
The borrower aggregated the two offers to create a full offer of underwriting, which was as close as possible to loan size the borrower was aiming for.
Long-sighted deal
Emmanuel Fatôme, partner in the real estate transactions department of De Pardieu Brocas Maffei, explained: “This is a large mixed-use project with lots of property uses. From an operational standpoint, this requires commercial flexibility from the lender because the return is only accessible once the buildings have been completed and occupied. It therefore requires a long-term view. At the same time, the lenders were aware of the unique aspects of the Canopia urban development, given the scale of the green financing.”
These conversations provided reassurance to lenders and created the necessary boundaries for all parties, giving Apsys the flexibility to carry out the plans for the project.
Fatôme added that adapting the structure of the development contract was a complex task, as there are 12 buildings involved with different purposes.
“We conceived and drafted a contract that provides a building-by-building completion process, so the payments can be processed per building, rather upon project completion.”
While not a contentious point for the lenders, the bespoke contract was a peculiarity of the financing, arising from the scale of the project.
The neighbourhood
Hotel groups Suitcase Hospitality, Staycity Group Aparthotels and student housing provider Sergic have already signed agreements to occupy buildings within Canopia.
Plans include planting around 600 trees on site, creating a leafy street designed by landscaper Michel Desvigne. A two-hectare-sized park will be created, lining the Garonne with a green wall across an area of 96,875 square feet, and an additional 37,674 square feet planted on rooftops. Designated areas will be pedestrianised with accompanying cycle zones.
These plans will allow Canopia to obtain certifications from the following organisations: BREEAM, BiodiverCity, NF Habitat HQE, EcoJardin and E+C-.
