French debt funds join the club to finance Apollo deal

BNP Paribas and funds back Apollo vehicle’s logistics portfolio purchase

Debt funds run by La Francaise Real Estate Managers and La Banque Postale have clubbed together with bank BNP Paribas to finance a French logistics portfolio for Apollo Global Management.

Apollo’s European Principal Finance Fund II paid €145m for the 11, seven-year let properties in an all-cash deal in mid-May. BNP acted as agent on the loan, which is an example of banks and debt funds taking part in club deals as co-lenders.

 This is La Francaise’s fifth financing for its €400m senior debt fund, which held a second closing at the beginning of May and has raised €230m so far.

Another of its recent deals was the €70m joint financing of the Perspective Defénse office building to the north of Paris with French institutional property fund manager ACOFI Loan Management Services.

Hines Global REIT bought the building for €126.5m from AXA Real Estate’s Immoselect open-ended fund, now in liquidation. The six-year facility was priced at 250 basis points over three- month euribor, even though the income is short term, and the loan-to-value level was 55.3%. The lending was split 50/50.

La Francaise’s investment manager, Thomas Aubert, said: “We secured an attractive margin [partly] thanks to the tenant profile and our ability to match the borrower’s amortising, flexibility and duration constraints. This helped us to secure the deal while preserving the borrower’s return.”

The 27,000m² building, constructed in 2007, is fully let to French nuclear company Areva and Société Générale. The sub-three-year lease duration represents “some risk”, noted Aubert, but a cash sweep on part of the excess cash flow before maturity has been negotiated with Hines.

The deal was ACOFI’s first commercial real estate loan origination. Last year it launched Predirec Immo 2019, a €280m senior debt fund for French corporate real estate, with Groupama, which has provided 55-65% LTV financing for Patron Capital Partners’ purchase of a 20,000m² office complex in Malakoff, Paris.

Deal number three will also be secured against a Paris office, for which ACOFI is underwriting €55m of a €200m, three-lender club also including La Francaise. By early August, the group will have allocated €131m of capital.

See June issue, pp20-22, for profiles of French senior debt funds