German real estate manager Patrizia and ARA Europe, the European subsidiary of Singaporean investment management firm ARA Asset Management, have collaborated on two real estate loan facilities in the UK and Spain last week, with a combined value of almost €60 million.
In the first deal, alongside German bank Deutsche Hypo as senior lender, the two managers provided UK construction firm Kier Group with £39.5 million (€46 million) of junior debt to facilitate a 130,000 square foot green office refurbishment in central Birmingham, UK.
Speaking to Real Estate Capital Europe, Beatrice Dupont, co-head of commercial real estate debt at ARA Europe, said the Birmingham office deal was delayed in closing as a result of the changing market conditions. She said the lenders believe the building’s prime location and sustainability credentials – including EPC A, Net Zero Carbon in operation and NABERS 5* rating – will position it well to capture evolving tenant demand.
The second transaction was a €12.7 million whole loan financing to London developer AMRO Partners to fund the development of a 160-bed purpose-built student accommodation scheme in Salamanca, Spain. The site is within walking distance of the University of Salamanca. The transaction is ARA’s fourth with AMRO in Iberia.
Augsburg-based Patrizia predominantly invests in real estate through equity strategies. In November 2021, it announced it had taken on a real estate debt mandate for a Hong Kong insurer, with an initial $50 million of capital focused toward investments across Europe and Asia-Pacific, with targeted annual net returns of more than 8 percent in US dollar terms. Patrizia added there was an intention to expand the mandate further.
ARA Europe, which underwent a restructuring of its property lending business, has a track record of real estate lending in European markets.
“While there are traps for the unwary in the current market, we are sourcing attractive investment opportunities by doubling down on our core investment philosophy: providing loans to high quality sponsors secured by assets with sound real estate fundamentals,” said George Cotterell, head of origination for real estate debt at ARA Europe.
The transactions bring ARA Europe’s debt transactions to three this year. The first was a £59.9 million loan secured by a Bristol office building, Dupont added.
ARA Asset Management was acquired by Hong Kong-based investment giant ESR in January 2022, in a $5.2 billion transaction.