TH Real Estate has sourced a €240 million (£205 million) loan to refinance four London office properties, which completes an overall €470 million refinancing of the pan-European Cityhold Office Partnership (CHOP) portfolio.
ING and LBBW have provided two facilities in total to finance the prime office joint venture between TH Real Estate’s parent company, TIAA, and two Swedish pension funds, AP1 and AP2. Eastdil Secured advised on the refinancing.
In the latest deal, the Dutch and German banks have refinanced the four London assets at a 35 percent loan-to-value for a seven-year term. The portfolio includes 60 Great Portland Street in the West End, 12-14 New Fetter Lane in Holborn, the nearby 40 Holborn Viaduct and Belgrave House in SW1.
Last October, Real Estate Capital revealed that TH Real Estate had agreed a refinancing of continental European properties from within CHOP. At the time, the firm was in talks to secure around €300 million, although the firm has now announced that it eventually secured €230.9 million on four assets in France and two in Germany. The 50 percent loan-to-value facility was provided for 10 years.
The loan was written at a margin of less than 100 basis points, Real Estate Capital reported last October.
The continental European portfolio includes 70 Boulevard de Courcelles, 69 Avenue Franklin Roosevelt, 154 Rue de l’Universite and 36 Rue Lafayette in Paris, plus the Atlantic Haus and Burstah properties in Hamburg.
Alongside its efforts to refinance the portfolio, TH Real Estate has also sold certain assets in recent months, meaning that its debt requirement changed during the refinancing process. Earlier this month, the firm sold One Kingdom Street in London for £292 million to Chinese investor CC Land Holdings. In December, it sold The Peak, in London’s Victoria area, for £145 million to a private Middle Eastern investor.
CHOP is a €1.8 billion office vehicle which contains 14 assets comprising 250,000 square metres of space in London, Paris, Munich and Hamburg. CHOP, which was launched in 2015, primarily targets core investments in tier one cities. Additionally, the investment programme invests in ‘value-add’ opportunities such as leasing, renovation and development opportunities in tier one cities, as well as stabilised core investments within tier two cities.
“The prime and core nature of the real estate, moderate leverage requirements, and quality of the sponsors were key factors in attracting a high level of interest from real estate lenders. ING and LBBW were able to provide us with significant balance sheet/underwriting capacity and the added benefit of funding in both euro and sterling denominations; these factors have cemented their roles as our key relationship lenders,” said Farrah Brown, head of treasury at TH Real Estate.
“The financing of these assets will allow us to continue to deliver strong investment returns for our investors with sufficient flexibility to enable us to grow our CHOP portfolio across Europe,” Brown added.
“The competitive debt terms are credit to the high quality of the underlying real estate and is expected to drive long-term performance from the existing portfolio,” said Jasper Gilbey, fund manager for CHOP.