Six-strong bank syndicate to lend €1 bn on French portfolio

A consortium of mainly French banks is lending €1 bn to Unibail-Rodamco-Westfield’s new strategic partnership with Crédit Agricole Assurances and La Francaise, PropertyEU has learned.

Dutch headquartered international lender ING and one other bank are joining Crédit Agricole, Natixis, Societe Generale and BNP Paribas to underwrite the €1 bn senior debt package for the new joint venture, which is acquiring five French shopping centres currently 100% owned by URW.

The retail REIT is initially keeping a 45.8% stake in the assets but hinted at further selldown in a statement last week. ‘Net proceeds to URW are expected to amount to €1.5 bn. This amount will increase as other investors join the consortium now that this transaction is public,’ it said.

Furthermore, additional investments by the new consortium are thought to be likely added a source, given URW and the other investors view this as a ‘strategic partnership’.

PropertyEU first revealed URW had appointed JPMorgan to find co-investors in a package of French shopping centres last year.

The shopping centres are: So Ouest in Levallois-Perret, and Aéroville near Charles de Gaulle airport, both in Paris; Confluence in Lyon; Rennes Alma in Brittany; and Toison D’Or in Dijon.

The loan to value of the debt is close to 50% based on the agreed offer price for the assets of €2.037 bn. This represents a net initial yield of 4.8%.

The price achieved will be seen as a benchmark that puts a floor under the value of prime shopping centre assets at a time when the retail sector is under so much pressure.

One person involved in the deal said: ‘An interesting point about this transaction is it shows the price at which shopping centres can be monetised. Unibail is taking money out, and at the same time, showing everyone that there is a market for these kind of retail assets. The REIT has taken a very decisive step.’

Unlike some other specialist European retail REITs such as Intu, URW was not under pressure to sell trophy properties. But it wants to cut gearing while continuing to invest in its portfolio and carry out new development.

In its results last week, URW said it had slashed its development pipeline by €3.2 bn, cutting the cost from €11.9 bn to €8.3 bn with only 43% of this now expected to be pure retail space.

The largest casualty is a joint venture with retail REIT Hammerson to develop a €1.5 bn regional shopping centre in Croydon. However, a scheme is expected to be revived at some point in the future after a major redesign as mixed-use, including a hotel, offices and residential.

URW said it will continue to manage the five French malls being sold to the JV, which it added had ‘significant upside from identified projects’ as well as offering organic rental growth. The deal is expected to close during Q2 2020.


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