Term Sheet: Allianz delves into private rented sector lending; Tishman Speyer sources ‘community impact’ loan; Apollo backs Brookfield in Paris

Allianz Real Estate writes its first European private rented sector residential loan; Tishman Speyer sources ‘community impact’ loan from Helaba; Apollo finances Brookfield’s Paris office purchase; and more in today’s briefing, exclusively for our valued subscribers.

They said it

“As more lenders across Europe focus on financing core assets, more complicated value-add plays are available for whole loan providers from the debt fund universe like us.”

Martin Wheeler, co-head of ICG Real Estate, the London-headquartered property division of asset manager Intermediate Capital Group, explains where he sees the lending opportunity

What’s happening?

Allianz makes its European PRS debut
Allianz Real Estate has hit the latest milestone in the growth of its debt platform with its first single-asset loan transaction in the European private rented residential sector. The property arm of Munich-based insurer Allianz – which won its first third-party client for its debt fund last year – has issued £140 million (€161 million) in financing to Canary Wharf Group for 10 George Street, a 224,039-square-foot residential and retail property in London’s Canary Wharf area. The 10-year fixed-rate mortgage is also considered a green loan since it is collateralised by an asset rated ‘Excellent’ under the BREEAM sustainability assessment method and is fully compliant with the CRREM carbon reduction pathway for residential buildings.

Allianz’s head of European real estate, Roland Fuchs, said the transaction provided the company with an opportunity to “further diversify our European loan book through exposure to the dynamic PRS market”.

Community impact
It is becoming common to see real estate debt deals structured according to environmental sustainability principles. However, lenders and sponsors are also turning their attention to incorporating the social element of environmental, social and governance into their transactions.

The 10-year ‘community-impact linked’ real estate loan provided by German bank Helaba to New-York based manager Tishman Speyer represents a further example of how the pandemic has prompted the real estate industry to think deeper on the social impact of its activities. The loan, which will partially fund the acquisition by the Tishman Speyer European Core Fund of Les Magasins Généraux office building in Paris, includes a mechanism by which the lender waives part of its remuneration. The funds, matched by the borrower, will be allocated to support the AP-HP French Foundation (Public Assistance – Paris Hospitals) in its research into combating the covid-19 pandemic.

OakNorth experiments with life sciences
Life sciences real estate is a prime example of a niche sector increasingly viewed by debt providers as a strong, long-term prospect. The entry of new lenders into the sector, as is the case with OakNorth Bank, demonstrates growing lender interest. The UK challenger bank announced this week it had provided a £44 million (€51 million) loan to science and tech property provider Bruntwood SciTech, a joint venture between Manchester-based developer Bruntwood and UK insurer Legal & General.

OakNorth’s loan will be used to support the development of new office and lab space at Birmingham’s digital tech campus Innovation Birmingham, and healthcare technology centre Birmingham Health Innovation Campus.

A value creation toolkit
Many managers are busy rethinking how to keep properties resilient, future-ready and attractive to an ever-younger demographic that expects more than just floor space from homes, offices and shops. And it seems active management is the required modus operandi to enhance value and deliver returns to investors. Affiliate title PERE’s special report on Value Creation highlights five things managers can do now to do just that:

  1. Reposition the physical space – would retail work better as homes?
  2. Think of space as a service – consider adding amenities or introducing flexible lease structures.
  3. Know your tenant – get closer to tenants, understand their needs and how they are using space.
  4. Embrace data analytics – to understand how assets are performing and which locations are most likely to attract tenants and higher rents.
  5. Think ESG – “If you do not [you] are at risk of running into a gating issue, where potential buyers and tenants just cross your asset off their list,” says Partners Group’s Jessica Wischer.

PERE Global

Be sure to tune in
PERE’s first fully-digital, all-week conference is up and running. The ‘chase the sun’ PERE Global Summit Virtual Experience [visit the event’s dedicated website here] connects private real estate’s most influential community of institutional investors, managers, advisors and other strategic partners. Substantial networking opportunities accompany a comprehensive conference agenda.

Today, at 3pm, UK time, Real Estate Capital editor Daniel Cunningham will be joined by Nuveen Real Estate’s Christian Janssen, ICG Real Estate’s Philippe Deloffre, NN Investment Partners’ Simon Uiterwijk, and AEW’s Cyril Hoyaux to discuss the opportunities and challenges ahead for Europe’s real estate debt fund managers.

Data snapshot

Loans for sale
European real estate loan sales activity increased during Q1, although consultancy CBRE expects the real surge to come in 2022 and 2023 as covenant defaults trigger loan disposals.

Loan in focus

Apollo backs Brookfield in Paris
New York-based investment giant Apollo Global Management has made its second senior lending move in the Paris office sector since the start of the pandemic. After providing a €101.3 million loan for the acquisition of an eight-storey office building in north-east Paris in December 2020, the firm is now providing a €161 million loan also secured against another office property in the French capital.

The financing will fund the acquisition of Millenaire 1 by property giant Brookfield Asset Management and Paris office specialist Hemisphere. The building, built in 2007 and renovated in 2018, it is fully let to tenants from the financial sector.

Today’s Term Sheet was prepared by Daniel Cunningham with Eugenia JiménezJonathan Brasse and Evelyn Lee contributing

Term Sheet is Real Estate Capital’s new weekly, subscriber-only newsletter, landing in inboxes every Wednesday.

Not yet a subscriber? Click here to subscribe now.