Five lenders inject €300m to refinance Valad Europe fund

High Income Fund’s refinancing took more than six months to arrange

Five banks have completed the largest pan-European financing so far this year, for Valad Europe. The €300m, four-year loan at a margin just above 300 basis points refinances 63 of 100 logistics and industrial properties in Valad’s European High Income Fund.

The assets comprise 18 in Germany, 21 in France, mainly in the Ile de France region, and 24 in the Netherlands. The fund generates an internal rate of return of 10-12%.

Deutsche Pfandbriefbank and Helaba were joint arrangers and took the largest participations in the club; BAWAG took £60m, and Natixis and RBS also participated. The loan took more than six months to put together, reflecting the difficulty of forming clubs for large deals.

It replaces a Helaba and Royal Bank of Scotland facility. RBS is withdrawing from most European real estate lending and did not take part in a recent refinancing for client Value Retail.

Valad’s EHI fund has been extended by four years in line with the new loan, to the end  of 2015, and the assets will be managed and gradually sold off.

David Kirkby, head of fund management at Valad Europe, said the refinancing “created an excellent opportunity to manage and trade the portfolio to optimise returns”. None of Valad’s other European funds need imminent refinancing or extensions.

Natixis is expected to fund its participation via the German pfandbrief market. The French bank has applied to German regulator BaFin for a licence to issue pfandbrief and has created a new business to finance more real estate lending this way.

Staff at the business, which will focus on Germany and France, include Henning Rasche, a former Eurohypo executive and president of the German Association of Pfandbrief banks and Ralf Wittenbrink, formerly at HSH Nordbank.