Aareal agrees €1bn lending facility to Invesco for ten years
In one of the biggest loan deals arranged in the real estate sector this year, the Wiesbaden-based Aareal Bank has agreed to provide US investment manager Invesco Real Estate a loan facility of up to €1bn over a 10-year period to help roll out its core-pan-European strategy.
Under the terms of the deal, Invesco can use the loan to invest in 27 locations across seven European countries including the UK for it European real estate portfolio, which already manages more than €3bn in assets. Invesco and Aareal have already worked together for several years, so both are well known to the other. Eastdil Secured worked with Invesco to secure the facility.
Invesco has US$7.9bn of assets under management (130 separate assets) in Europe alone (of a total of $72bn worldwide), with 140 of its total 441 staff deployed across eight offices in Europe.
Around €610m has been drawn down by Invesco Real Estate from the facility, with the option to extend the facility by an additional as yet uncommitted €390m. Aareal Bank will be able to syndicate parts of the facility to one or more strategic third parties, as part of the arrangement.
According to Andy Rofe, Invesco Real Estate’s managing director for Europe, 'For us, this is a groundbreaking project in our industry, which creates a loan facility that fits both the profile and nature of our very large and growing, high quality and diverse, pan-European mandate with properties in some of the strongest locations in the UK and Europe."
“The bespoke arranged facility will allow IRE both the stability and security of locking in low interest rates for a 10-year term. It will also provide us with the flexibility to grow our pan-European mandate from its current €3bn in assets under management by having debt already in place to quickly take advantage of new opportunities arising in the market.”
Separately, Invesco Real Estate is selling a portfolio of seven hotel assets two years ahead of its fund’s expiry for €415m to listed Swedish hotel company Pandox. (We reported on this deal in the November issue of REFIRE). Invesco's second pan-European hotel fund, launched in 2011, will be closed on the completion of the sale this month.
The Pandox hotels deal involves four assets in Germany (Cologne, Munich, Frankfurt and Hamburg), two in Austria (Vienna and Salzburg) and one in the Netherlands (Amsterdam)– with a total of 1,744 rooms. The acquisition price amounts to €415 million, or about SEK 4,100 million, on a debt free basis, equating to about €240,000 per room.
The high-quality full-service hotels are operated by well-established hotel operators (NH Hotels, Rezidor and Grand City Hotels) under well-known brands (NH, Radisson Blu and Park Hotel Amsterdam) with long-term revenue-based lease agreements with rental guarantee levels and shared investments, which Pandox says is the core of its business model. The hotels have an average size of 250 rooms.