Top Stuttgart retail property refinanced by Evans Randall

The UK-based investment banking and private equity group Evans Randall said this week that it had completed a full refinancing of its senior debt position on one of its major German assets, the Königsbau Passagen in Stuttgart.

The property, once the home of the Stuttgart Stock Exchange, is probably the most prominent commercial building in Stuttgart, located alongside the historic Königsbau building in the very centre of Stuttgart's shopping and business district.

Evans Randall said the refinancing replaces the existing maturing facility from HSH Nordbank which was put in place when Evans Randall bought the centre for €220m in 2006. The new loan includes a senior facility from Allianz for €145 million at a fixed rate of 3.5% per annum and with no amortisation for the first two years, while European Real Estate Debt II S.à.r.l, advised by DRC Capital also provided a mezzanine facility of €37.5 million. 

Both facilities are for a seven-year term, which Evans Randall said was a core element of its strategy, “being to take advantage of historically low interest rates and pursue longer term value-enhancing asset management initiatives.” Allianz already has a loan book of €1.3bn and has made it clear it intends to boost its senior debt exposure over the coming years; late last year it hired Roland Fuchs from Helaba in France to spearhead its European real estate finance drive.

The centre, which is managed by specialist shopping centre manager ECE, is the largest shopping mall in Stuttgart. It comprises 26,000 sqm of prime retail space in more than 70 shops, 18,000 sqm of prime office space and car parking below the centre with 415 spaces. It features a range of more than 70 upmarket retail, dining and leisure outlets across five floors, and has recently undergone a major revamping including the creation of a new top-quality food lounge on the second floor, which has added about €14m to its capital value, based on new income generated of more than €700,000 per annum.

Evans Randall's CEO Kent Gardner commented: “The successful completion of the recent redevelopment works was a key step in our strategy to create additional value through increasing occupier and consumer appeal. Combined with a robust refinancing deal with leading lenders, this has added to the investment appeal of this prime international asset, providing the means to further drive increases in rental income and capital growth. ”

Evans Randall invests in large-scale and normally prestigious commercial and retail assets for both itself and investor clients, and holds a range of high profile assets in its portfolio, including 50% of the Gherkin in London, the HBOS headquarters in London, the ING Bank building in the Hague, and the European Commission's new headquarters building in Brussels, among others. It normally targets real estate returns of 20% upwards annually.