Three separate jumbo loans - from banks, a new non-bank lender and the debt capital markets - show finance markets are in good health.
Aareal Bank put together a club including Rabobank which advanced €566 mln of debt to The Social Hub, the sponsor formerly known as The Student Hotel.
With its strong track record of lending to hospitality investors, Aareal said it liked TSH’s brand of hybrid developments which offer co-working, events, hotel, extended-stay rooms and student accommodation.
The loan is another slug of debt which the German bank can classify in its book as green under its Green Finance Framework.
In a second large loan arranged in the private debt market, new lender in Europe, Otera, joined with RBC Capital Markets to write a bespoke £525 mln, five-year package for Blackstone subsidiary St Modwen.
Like RBC, Otera is Canadian, being the real estate lending subsidiary of the Caisse de dépôt et placement du Québec. The transaction marks Otera’s first real estate debt investment in the UK where it would like to expand.
And in a further sign that the debt capital markets have stabilised and re-opened for real estate, particularly for green product, French listed propco Covivio issued a €500 mln bond which it said was four time oversubscribed.
There were small to medium-sized deals across the residential, hospitality and leisure sectors. The largest deal finalised this week, at €481 mln, was a related party transaction between CPI Property Group and its associated company, S Immo.
Another core/core+ real estate fund may be about to put its assets up for sale and close down – if that’s what a strategic review finds best for Abrdn European Logistics Income’s investors. The company is trading significantly below NAV despite the assets being a favoured sector, and said it’s relatively small size (£234 mln market cap and €411 mln NAV) may ‘deter some potential investors due to lower share liquidity and a higher relative cost base’.
We also track the latest funds on the market. They include Hines’ successful €1.6 bn final close of its third value-add fund, despite the process ‘not being a walk in the park’ as its manager described it.