New TIAA-CREF/AP pan-Euro office fund sources debt with ING

Cityhold Office Partnership has secured a €231m, 18-month bridging loan from ING Real Estate Finance for part of its €2.2bn office portfolio.

The joint venture, formed in September by US teachers’ pension fund TIAA-CREF and Swedish National Pension Fund’s AP1 and AP2 funds, targets pan-European offices. It is advised by TH Real Estate, which is owned by TIAA-CREF.

The partnership is seeded with 15 assets, located in the UK, France and Germany and includes 12-14 New Fetter Lane and One Kingdom Street in London, Tour Areva in Paris, and Atlantic Haus in Hamburg.

ING’s €231m facility, which is understood to be under 200bps, will be allocated over six of the portfolio’s assets and is expected to be replaced by a larger refinancing round. The 18-month term is to enable the partnership to build a track record in the market in case it decides to issue a public bond.

“The competitive terms of the new facility are credit to our strong relationship with ING and the high quality of the underlying assets and tenant base,” said Jasper Gilbey, TH Real Estate director and lead adviser of the investment vehicle.

Andrea Patti of ING Real Estate Finance said: “This is the result of a long and complex process to assist TH Real Estate during the establishment of the newly-built Cityhold Office pan-European investment platform.”

Cityhold plans to target direct office investments in London, Paris, Munich, Hamburg, Frankfurt and Berlin. It will also invest in value-add opportunities such as leasing, renovation and development in those locations as well as in cities such as Madrid and Milan.

It will begin an investment programme with capital from the partners involved, targeting an additional €2bn of investment over the next 3 years. The investment vehicle will use debt at a loan-to-value ratio of 50%.

“Our ambitions are to grow assets under management in the Cityhold Office Partnership from c€2.2bn to €4bn+ over the next 36 months and, in parallel, we will seek to implement a more holistic long-term debt solution to facilitate our investment programme,” said Gilbey.

TIAA-CREF will hold a 50% interest in the vehicle and each AP fund will hold 25%.