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LBBW goes big with €1.1bn Potsdamer Platz redevelopment loan

A comprehensive repositioning of the retail space inside the Potsdamer Platz Shopping Arkaden is scheduled to begin next January.

German bank LBBW has demonstrated lender appetite to finance redevelopment in the German market with a €1.1 billion long-term financing to Brookfield Properties for a revamp of a key element of Berlin’s Potsdamer Platz.

The loan will replace financing from a consortium of banks and will co-finance Brookfield’s repositioning plans for retail space within the Potsdamer Platz Shopping Arkaden retail scheme.

Berlin’s Potsdamer Platz quarter, consisting of 17 buildings, 10 streets and two squares, was acquired in 2015 by Brookfield and sovereign wealth fund Korea Investment Corporation from Savills Investment Management. The parties did not disclose the purchase price of the portfolio, but it was understood to be around €1.4 billion, according to reports from Real Estate Capital’s sister publication PERE.

To back the purchase, Brookfield sourced a €800 million loan from HSBC, which was largely syndicated to AXA Investment Managers and a group of banks including Bank of China, pbb Deutsche Pfandbriefbank, Helaba and Berliner Sparkasse.

Planning is currently underway for a comprehensive repositioning of the retail space within the Potsdamer Platz Arkaden shopping centre, scheduled to start in January 2020. The repositioning, which will be carried out by German property developer ECE, will modernise the existing mall to provide shop space and dining options across six themed areas.

“By repositioning the centre, we will create a destination that will be second to none in Germany and we will strive to attract new target groups and customers,” said Steffen Friedlein, managing director leasing at ECE last November.

LBBW’s global head of real estate Patrick Walcher said the financing strengthens its “longstanding” business relationship with Brookfield. “Brookfield … benefits from one-stop financing thanks to our established syndication platform, which allows us to perform a sole underwriting of this scale.”

Following the acquisition and repositioning of the estate, Brookfield has achieved over 90 percent occupancy rate across the portfolio, with a total rental space of 270,000 square metres, the Toronto-based asset manager said.