pbb financing Berlin and Frankfurt towers, Berlin Hyp’s green bond

Munich-based property financing bank pbb Deutsche Pfandbriefbank provided the financing for two of Germany’s more prominent office assets this month, the Pressehaus am Alexandraplatz in Berlin and the four towers making up the FOUR Frankfurt project.

The bank is lending Frankfurt-based GEG Group €170m for the Pressehaus, an ensemble built in the 1970s and consisting of a 16-storey high-rise with around 24,200 sqm of rental space and a two-storey flat building, the “Pressecafé”. The planned new building consists of seven storeys and will offer around 10,000 sqm of rental space. GEG is buying the complex from Tishman Speyer in a €365m deal.

Gerhard Meitinger, pbb’s Head of Real Estate Finance Germany, commented: “The planned new development means an effective and attractive redensification of the property. The very good and sustainable lettability enhances the overall value of the location”.

In Frankfurt, a new high-rise quarter, FOUR Frankfurt, is rising out of the ground in the city centre. Along with BayernLB, pbb has provided financing for one of the four towers in the project, managed by Groß & Partner, with both banks providing equal parts of a three-digit million sum to finance the T3 building. pbb is acting as lead arranger and agent.

The mezzanine financing is provided by a German pension fund whose participation is managed by Collineo Asset Management. More than 20 financing partners with different structures are providing more than one billion euros for the construction of the entire quarter. Helaba is the lead bank for the 228m tower T1, with a DWS-managed fund providing a sum in the three-digit millions as mezzanine capital. Deutsche Hypothekenbank is the lead bank for the residential tower T2, with mezzanine capital coming from international investors through Flins Capital Partners. Financing for the 10 m high office tower T4 on Junghofstraße had already been firmed up, with the sale of the property to a Union Investment fund in July 2018.

Pbb’s Meitinger said of the project, “FOUR enriches Frankfurt not only architecturally. The areas between the buildings will be freely accessible and thus open up a previously self-contained area to the public.”

Meanwhile, pbb closed its first primary transaction in the USA when it provided $240m to Simon Baron Development Group LLC in a co-underwritten deal with Société Générale, with pbb also acting as mandated lead arranger. The loan serves as refinancing of the ALTA+ residential complex in Long Island City. Investment manager Square Mile Capital previously made and still holds a $138.5 million preferred equity investment in connection with the recapitalization of ALTA in October, 2018.

The Munich bank has been active in the USA since the second half of 2016 and already has a lending book of about €2.2bn. Having started out with syndicated business in New York, Boston and Washington, pbb now covers all 7 US gateway cities and conducts primary business on the East coast markets. It established a representative office in summer 2018.

Back in Germany, on the refinancing front, lender Berlin Hyp said it had issued its fourth green pfandbrief, bringing the total volume of outstanding green bonds to €3.5bn.

The eight-year, €500m bond, bearing a coupon of 0.01% and rated Aaa by Moody’s, generated €1.7bn from 78 investors at the close of the order book earlier this month.

More than half the bond was placed abroad (59%), with investors from Scandinavia (13%), UK (9%), Asia and France (8%) showing particular interest. Banks ordered 48% of the bond, while funds participated with 30%. A further 22% went to central banks and official institutions. Savings banks and affiliated companies subscribed to almost 19% of the issue. The share of socially responsible investors (SRI) in the final order book was 51%. Berlin Hyp will use the proceeds from the issue to refinance loans for green buildings. The applicable criteria for classification as a green building are predominantly based on the energy efficiency of a commercial property, but also include other sustainability criteria.

‘The high demand from international and SRI investors shows once again that we are on the right track with our Green Bond concept and encourages us to continue this strategy bravely,’ said Gero Bergmann, Berlin Hyp’s management board member responsible for capital market business.