Term Sheet: REC Europe Awards 2023 voting to begin, Mubadala takes a shine to Europe, €260m Dutch retail refi closes

Voting is due to open in our annual awards, showcasing the best amid a challenging year; Abu Dhabi sovereign investor Mubadala forms an investment partnership that demonstrates the allure of European real estate debt; German and French banks close a major Dutch shopping centre refinancing; and more in today's briefing, exclusively for our valued subscribers.

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What’s happening?

Get ready to vote in the annual awards (Source: Getty)

REC Europe Awards 2023: Fingers at the ready

At long last, the much-anticipated Real Estate Capital Europe Awards 2023 are to be opened to the public vote. From tomorrow, you will be able to vote for individuals, organisations and transactions that shaped Europe’s real estate debt market in 2023 – one of the most challenging years in living memory.

We do not want to give anything away until the shortlists are announced. But here are some of the main themes:

  • Banks were less busy, but still closed sizeable deals – typically in clubs.
  • Alternative lenders were not uniformly active, although several engaged in major refinancing deals.
  • Beds and sheds were popular sectors amid a slowdown in office lending.
  • Although there were a limited number of deals, development financing transactions were impressive.

To read analysis of last year’s awards, click here.

Mubadala’s debt ambitions

Mubadala Investment Company, the sovereign wealth investor for the government of Abu Dhabi, announced today that it aims to significantly grow its presence in the European real estate debt market. The investor has joined forces with Abu Dhabi real estate company Aldar and US private equity firm Ares Management to jointly invest $1 billion into Europe’s property lending market in the coming three to five years.

Mubadala will hold a 50 percent stake in the platform, while Aldar will hold 30 percent and Ares will hold the remainder. Through the partnership, the firms plan to invest in private real estate credit in the UK and Europe. In addition, Aldar will invest $100 million into an existing European private real estate credit strategy with Ares. In time, the Ares strategy is expected to upsize to around $2 billion in capital from Mubadala, Aldar and Ares funds. The announcement shows Europe’s property debt space remains an attractive destination for international capital at a time when loan pricing is heightened. Read our coverage.

WeWork’s trail of office losses

Two London offices linked to the ailing co-working space provider WeWork have hit the headlines for losses either crystallised or expected for their owners or lenders. The vacant 125 Shaftesbury Avenue in the West End, to which WeWork handed back the keys on a 20-year lease shortly after sole tenant Meta left for pastures new in 2021, has been sold. Real estate developers Edge and Mitsubishi Estate have acquired the 1980s office building from Vestas Investment Management and Savills Investment Management, and will redevelop it into a “modern, innovative workplace” per an announcement. The sale price has been reported at £150 million (€175 million), representing a 44 percent decline from the £267 million paid by the Korean-UK manager joint venture in 2018.

Over in the City, a lender is facing a loss against the majority WeWork-occupied One Poultry building, according to the Financial Times. Bank of Ireland appointed adviser Eastdil Secured to sell a £90 million loan secured against the building, which is owned by Korean manager Hana Alternative Asset Management, but bids have come in lower than expected, at around £70 million. Earlier this year, affiliate title PERE reported how one executive likened a WeWork lease to the “sword of Damocles” for its loss-making potential.

Ashby goes shopping

In May, REC Europe revealed that London-based private equity real estate firm Ashby Capital had set up a platform to lend to the UK real estate industry. It has now underwritten its first deal. Ashby has issued a £90 million facility to refinance a West Midlands retail park owned by MDM Asset Management and Hana Securities. The financing was provided alongside German lenders pbb Deutsche Pfandbriefbank and Aareal Bank.

Ashby underwrote the mezzanine portion of the loan for the Gallagher Shopping Park, providing £20 million for three years at a fixed rate, while the incumbent lenders pbb and Aareal provided the senior loan. In total, the debt represents a loan-to-value of around 70 percent. Ashby’s debt platform is focusing on development loans and mezzanine debt with a £10 million-£50 million ticket size and a term of between one and five years.

Valor swoops more debt from North America

Valor Real Estate Partners featured in last week’s Term Sheet for securing a new lender for its expanding logistics business. On 5 December, it received a £101 million investment facility from Canada Life Asset Management – the first time the subsidiary of Canada’s Great-West Lifeco had provided debt to the business. On Wednesday, REC Europe revealed that US manager BGO had also issued a loan to the urban logistics developer for the first time. The £64 million loan refinanced a 216,000-square-foot sustainable last-mile logistics estate in Beckton, East London – an area of the UK where Valor is rapidly expanding.

Rising demand for same-day delivery is manifesting opportunities for investors and, to that end, more loans from the two North American groups are expected. BGO’s managing director Martin Sheridan said the company had “high conviction” about the UK logistics market; Canada Life Asset Management said it would be issuing further loans to Valor as it grows.

People moves

European expansion: Gow (right) and Peters are taking on new roles. (Source: CBRE)

Gow’s European remit

Property consultant CBRE this week announced Chris Gow, its head of debt and structured finance [his LinkedIn here], will expand his leadership responsibilities in the New Year to encompass the whole of the European market. Gow has been appointed head of debt and structured finance, Europe, effective from 1 January. He joined the firm in 2020 and has been leading its debt team in the UK and Ireland since January. In his expanded role, Gow will be responsible for accelerating CBRE’s debt advisory business’s growth across Europe. The firm added that Robert-Jan Peters, head of debt and structured finance in the Netherlands, will assume greater responsibility across continental Europe.


Real world solutions

Sticking with CBRE, Chris Gow offered some good news to the market on Wednesday after the property consultant revealed its estimation as to the size of Europe’s debt funding gap. CBRE believes €176 billion – which is about one-third of maturing loans over the next four years – would struggle to find new debt. But Gow said the extent of the funding gap may be mitigated by “real world” processes, such as lenders extending and amending terms: “In practice, we should recognise that lenders and borrowers have been agreeing loan extensions and amendments to allow more time for the market to stabilise and for funding issues to be resolved in an orderly way.”

Europe’s worst is over

US property company Hines has issued a bullish outlook for Europe’s real estate market in 2024, prompted by the European Central Bank’s tightening campaign being “nearly over”. The Houston-based company said fewer banks were tightening lending standards in the region and that relatively low vacancies and a constrained supply pipeline would draw for investment. It identified worsening supply shortages for office tenants in London’s West End and Paris’s CBD over the year ahead, while “chronic” undersupply issues had created attractive prospects for the growing single-family rental sector.

Data snapshot

Nothing compares to Signa

Scope Ratings says the insolvency of Austrian property company Signa should not unduly unsettle Europe’s commercial property market. “The company’s troubles are an amplified rather than typical example of the challenges [that] the [European commercial property] sector faces. With predominant exposure to retailing and real estate, Signa has faced stiffer headwinds than most companies in these two sectors,” wrote analysts Philipp Wass and Thomas Faeh in a note published this week. The analysts also showed Signa’s pipeline outstripped those of selected peers.

Loan in focus

Hoog Catharijne shopping centre: Subject of a €260m refinancing (Image: Alfred Cromback)

A Dutch, green, retail loan

Today, it was announced that a consortium of banks – Germany’s Berlin Hyp and Deutsche Hypo – NORD/LB Real Estate Finance, plus French lenders Natixis CIB and Societe Generale – have refinanced the Hoog Catharijne shopping centre in Utrecht for landlord Klépierre with a green loan of €260 million. The shopping centre is one of the most visited in the Netherlands, with footfall of more than 30 million per year. It has also been extensively renovated and modernised.

“Retail remains an important pillar of revitalised city centres,” said Benjamin Cartier-Bresson of Berlin Hyp, on behalf of the consortium of banks. “Prime locations and innovative concepts and a strong ESG commitment are important to keep shopping malls attractive beside the existing online retail offer.”

Today’s Term Sheet was prepared by Daniel Cunningham, with Lucy Scott, and Jonathan Brasse contributing.