TH Real Estate has refinanced a portfolio of core continental European offices from the Cityhold Office Partnership (CHOP) with a €300 million loan from two European banks, Real Estate Capital can reveal.
Dutch bank ING Real Estate Finance and Germany’s LBBW have provided the ten-year loan, which is secured by German and French office buildings. The loan is understood to carry a margin of less than 100 basis points over three-month Euribor. It has been provided on a 50/50 basis by the two banks.
CHOP is a joint venture between TH Real Estate’s New York-based parent company, TIAA-CREF and the Swedish National Pension Fund system’s AP1 and AP2 funds. The partnership owns prime offices in London, Paris, Munich and Hamburg.
TH Real Estate originally instructed Eastdil Secured to source a refinancing of the entire CHOP portfolio in July, with a euro financing for the continental European assets known in the market as ‘Project Bull’ and a sterling financing of the UK assets known as ‘Project Lion’.
The debt requirement for the continental European properties was originally €500 million, although the financing provided by ING and LBBW reflects a reduced portfolio. At this stage it is unclear which properties are included, although French and German assets are understood to secure the financing.
The full CHOP continental European portfolio comprises:
- Tour Areva, Paris; 66,407 square metres
- 70 Boulevard De Courcelles, Paris; 4,661 square metres
- 69 avenue, Franklin Roosevelt, Paris; 1,965 square metres
- 154 Rue De L’Universite, Paris; 5,070 square metres
- 36 Rue Lafayette, Paris; 8,149 square metres
- Burozentrum Nymphe, Munich; 15,057 square metres
- Sonnenstrasse 15, Munich; 8,939 square metres
- Atlantic Haus, Hamburg; 32,373 square metres
- Burstah Offices, Hamburg; 17,282 square metres
The refinancing process for the UK properties, which is believed to be of a similar scale to the European deal, is ongoing.
ING is an existing lender to CHOP, having provided bridging finance to the portfolio. In September 2015, TH sourced a €231 million, 18-month loan to finance six of the 15 assets held by the partnership, including Tour Areva in Paris. The facility was later extended to cover a London office purchase.
The CHOP joint venture was established in August 2015, with the intention of building a €4 billion-plus office portfolio. The two Swedish pension funds had founded Cityhold Property AB in 2011. TH Real Estate brought the parties together and manages the vehicle.
The initial CHOP office investment platform has a portfolio of 16 core offices and is valued at €2.2 billion.
The joint venture was capitalised with investment from the TIAA General Account, AP1 and AP2 to invest in an additional €2 billion of property over the next three years. The fund is targeting core cities including London, Paris, Munich, Hamburg, Frankfurt and Berlin, with the ability to also target value-add opportunities in tier one cities and stabilised core offices in tier two cities.
All parties declined to comment.