Ares has selected Citi to finance its €500m (£350m) purchase of 30 offices across the Continent.
The US investor bought the portfolio, known as Project Traction, from IVG Immobilien in June this year.
Citi has backed the purchase with a five-year senior loan of around €375m, reflecting a loan-to-value of close to 75%.
The loan has been priced at a higher margin than for many recent portfolio trades owing to the assets’ high vacancy rate.
The average vacancy across the portfolio was 30% at the time of purchase.
The assets are not located in the most desirable investment markets in Europe, with 40% in France, 35% in the Netherlands and the balance spread between Spain, Belgium, Finland and the UK.
IVG had offered the portfolio at €420m, a 6.5% yield, when it was put up for sale in the spring. Ares’ winning bid reflected a yield of 5.5%.
Citi is likely to syndicate the Traction loan in the coming months unless conditions improve significantly in the CMBS market, which has seen a number of deals from other banks struggle over the summer.
Citi’s involvement in the deal is the latest in a long line of transactions the US investment bank has financed for Ares.
In May last year the bank refinanced the loan on the Walbrook Building, EC4, held by Ares and partner Delancey. Citi provided £300m in senior debt, which the bank later syndicated.
