Weekly data sheet: Eurozone bond markets reopen for real estate as investor interest picks up

With falling inflation bringing some stability to financial markets, European real estate borrowers are starting to issue public debt again.

Tikehau Capital and Primonial-managed Praemia Healthcare sold a combined total of €800 mln of notes in the last week. The fixed coupon on Praemia’s €500 mln issue is 5.5% while Tikehau is paying 6.625%.

The issues came just before yesterday’s further 25bps hike to the eurozone interest rate by the ECB, taking the deposit rate to 4%; however, the central bank hinted that borrowing costs have now peaked and will likely stay high for some time. The bank said its tenth consecutive raise indicated ‘interest rates have reached levels that, maintained for sufficiently long duration will make a substantial contribution to the timely return of inflation at the (2%) target.’

Both Praemia and Tikehau’s were sustainable bonds, with Tikehau’s €300 mln offer placed with 60 investors. Investors increasingly prefer to finance green real estate or assets for which borrowers have a detailed brown-to-green implementation plan. Separately, Cromwell Group secured its first green loan in Europe this week, refinancing a Warsaw shopping centre.

In another very large debt raising, Quintain refinanced its 2016 corporate and infrastructure loans for Wembley Park in London with relationship bank JP Morgan, along with Cheyne Capital, in a £780 mln debt package. A year ago JP Morgan advanced £277 mln to the Lone Star-owned borrower in Quintain’s largest- ever development loan for the next phase of the estate which has currently has more than 5,000 homes.

Large volume investment deals remain sparse but there was a €600 mln transaction, closed by sovereign wealth fund ADIA. ADIA bought 17 hotels totalling 2,587 rooms in 11 cities across Spain from Equity Inmuebles. The portfolio includes six hotels in Madrid and eight resort properties.

ADIA is also buying a 51% interest in a further seven hotels with 2,331 rooms, from Avenue Capital, which will take the SWF’s spend on Spanish hotels to €800m.

Patrick Saade, senior MD at JLL which advised ADIA said the Equity Inmuebles deal was a landmark sale of ‘the largest portfolio in Spain… underlining the resilient and appealing nature of the hospitality sector.’

Adler Group continued its asset sell off to restructure its balance sheet with two transactions totalling approximately €430 mln: Wasserstadt Mitte in Berlin comprising 711 flats and No 1 in Mannheim which includes a 4-star, 150-room Holliday Inn.

Two more London asset came to the market this week: a Hong Kong investor is to sell a City office building while Lothbury Property Trust put its flagship retail investment in Covent Garden up for sale, hard on the heels of its sale of two West End offices.

We also track four funds: the launch of two new debt funds; Meridia’s latest Spain-focused value-add vehicle; and Feria’s second close of its logistics development fund.

Click here to access all the data.


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