New Mall of Berlin sets news standards for German retail and financing
After a number of delayed starts, it looks like Europe’s biggest urban shopping development, the Mall of Berlin, is all set to open on the 25th September in the city’s historic Leipziger Platz in Berlin-Mitte, between the Reichstag, Friedrichstrasse and Potsdamer Platz. It is certain to set new standards in many respects – its sheer scope and size, its innovative approach to reconstructing a whole city quarter rather than the usual collection of bundling the usual retail suspects under one giant roof, and the selection of retailers themselves, many of whom would not traditionally be drawn to German cities’ downtown shopping centres.
The financing of the giant project has also broken a number of records, and set a new standard for the ability of developers to realise massive projects without the traditional reliance on typical bank lenders as the primary financial providers.
Deutsche Hypothekenbank, the Bayerische Versorgungskammer (BVK) and BNP Paribas Real Estate REIM are providing €600m in long-term financing for the Mall of Berlin project, a consortium owned by High Gain House, the vehicle of prominent developer Harald Huth, and his 30% partner the London-based Arab Investments, controlled by the Affara family office. The deal was arranged by Berlin-based Primor Capital Partners, with law firm Noerr acting for the lenders and GÖRG Partnerschaft von Rechstsanwälten representing the borrowers.
The Bavarian occupational pension fund BVK is putting up the lion’s share of the loan at €450m, while Hannover-based Deutsche Hypo is lending €80m as consortium leader and agent, and two debt funds managed by BNP Paribas REIM are putting up the remaining €70m. The loans are for 10 years, with BVK’s lending ranked as senior, the BNP loans as subordinate, and Deutsche Hypo’s spread across the other two. The deal ranks as one of the biggest-ever German real estate financings not principally provided by a bank lender, and certainly one of the biggest loans ever provided by a German institutional investor, BVK.
The financing partnership is part of the strategic co-operation between Deutsche Hypo and Germany’s biggest pension fund manager BVK which was agreed upon last autumn, and which we reported on in these pages. According to André Heimrich, board member and head of investments at the €60bn BVK, “Our agreed collaboration with Deutsche Hypo for projects like this can serve as an excellent example for future projects, while with the possibilities open to us as a financier, we will certainly be looking to finance further big projects.”
BVK has already financed several major German transaction over the past two years, including the Silberturm in Frankfurt (the ex-Dresdner Bank headquarters, now leased to Deutsche Bundesbahn) and Tower 185 in the Frankfurt business district, developed by CA Immo. BVK separately confirmed that it is looking at several new projects, some in the residential sector, which it plans to become more involved in, both as a lender within a consortium, as well as on its own.
The €70m tranche from BNP Paribas REIM funds is the largest financing ever granted by German debt funds. “This large-volume financing is a further important step towards establishing debt funds in Germany and underlines our market leadership in the area,” said BNP REIM chairman Reinhard Mattern. “We are convinced that the role of non-bank lenders in property financing will grow further.”
The spectacular Mall of Berlin at Leipziger Platz, on the location of the famous Wertheim department store which was destroyed in the war, will have 80,000 sqm of lettable retail space when it opens, with more than 270 retail and gastronomy tenants, along with 30,000 sqm of residential space. Along with a 12,000 sqm hotel, a further 50 stores will be opened in an adjoining building next year, while the residential area is expected to include the completion of 250 top-quality apartments, also by early next year.
The new centre will be the largest in Berlin in terms of shops and tenants, although not actually in terms of lettable retail space. That honour belongs to the Gropius Passagen in Berlin’s Neukölln neighbourhood, another project of Harald Huth’s which was completed in the late ‘90’s and currently has 85,000 sqm of retail space. Huth subsequently also completed another huge mall, the Schloss in Berlin’s Steglitz neighbourhood. The opening hours in the Mall of Berlin will be the longest in Berlin, however, with tenants required to keep their stores open from 09.00 to 22.00, rather than until 21.00 as is normal in Berlin’s other big centres.
Deutsche Hypo is the property financing division of north German landesbank NORD/LB. Active in Germany, UK, France, Benelux and Poland it has a balance sheet of €31.3bn. Bavarian BVK manages a total investment volume of €59bn. BNP Paribas REIM Germany, part of the French banking group, specialises in property Special Funds and Luxembourg SICAV solutions. The firm has €4.3bn of assets under management in 13 funds, two of which are debt funds. BNP Paribas bought iii-investments late last year from Germany’s HypoVereinsbank, a subsidiary of Italy’s UniCredit Group.