Segro and PSP add €208m of debt for European logistics JV

Three German banks have added €208m of bank funding at a competitive all-in cost of 2.2% to the Segro European Logistics Partnership (SELP), Real Estate Capital can reveal.

Helaba, Aareal and Deutsche Pfandbriefbank, all existing lenders to the joint venture between the UK REIT and Canadian pension fund PSP, have provided the additional finance. The new arrangements support the acquisition of €472m of logistics assets bought from Tristan Capital in Germany, Poland and France in June.

Helaba and Deutsche Pfandbriefbank have jointly put in place a €139m, five-year facility held against the joint venture’s German assets. Some €25m of the facility will be used for future development projects within this part of the portfolio, with the remaining €114m having been drawn down.

The same duo has also extended an existing €188m term loan that was put in place in October last year by €41m. This debt is secured against SELP’s Polish and Czech assets.

Lastly, Aareal has extended a €140m seven-year facility also put in place in October last year by €28m secured on the JV”s French assets.

The new debt has an average loan-to-value ratio of 39% on the portfolio acquisition value and is made up of fixed rate loans with a weighted average blended margin of 1.6% and a weighted average blended total cost of 2.2% per annum over the life of the facilities.

Justin Read, Segro group finance director, said: “We are very pleased to have had the opportunity to work with the existing SELP lending banks to put in place such cost effective debt funding for our recent portfolio acquisition. These financings are consistent with SELP’s funding objective to enhance returns through low cost debt whilst maintaining a moderate level of financial leverage.”

Last October the same three banks lent Segro and PSP a combined €428m of funding to help seed their joint venture with 17.2m sq ft of assets. Properties in Segro’s portfolio were bought by the joint venture and subsequently leveraged. In addition to the €188m of debt from Helaba and Deutsche Pfandbriefbank for the Czech and Polish assets and the €140m from Aareal for the French assets, Deutsche Pfandbriefbank provided a €100m, five-year facility held against its assets in Germany, the Netherlands and Belgium.

SELP was formed in June last year with the ambition of growing its portfolio to €2bn “over the coming years”. It has a loan-to-value cap of 40%.